What the Guardian gets wrong about Social Health Insurance
12 July 2023
SUGGESTED
Healthcare
Markets and Morality
Economic Theory
11 November 2024
The Guardian has recently published a surprisingly reasonable critique of Social Health Insurance (SHI) systems. They still get it wrong overall, but that’s not the point. It’s the Guardian, so of course they’re wrong. That goes without saying. The point is that while a standard Guardian article is wrong in annoying and frustrating ways, this one is wrong in quite plausible and understandable ways.
NHS vs SHI
Guardianistas are usually comically bad at understanding what their opponents actually believe. This article is refreshingly different. It starts with an amazingly accurate summary of the position of the NHS’s critics:
“A popular theory has emerged in recent years. It goes like this: when it comes to the National Health Service, Brits suffer from a species of Stockholm syndrome. We are so deep in collective delusion that we can’t, or won’t, see its miserable faults, let alone countenance the sort of changes that could actually save it. Swapping to a different sort of service […] would be better, but blinkered by mass hysteria our people simply will not have it. Having at one point rashly decided to make the NHS our “national religion”, we have for some time now been worshipping a god prepared to abandon his flock on a trolley in a corridor for 16 hours.”
Correct. That is exactly what I believe.
The author, Martha Gill, then proceeds to offer a defence of NHS sentimentalism:
“[T]here is something rational about [our attachment to the NHS]. […] Brits are not blind to the institution’s problems – it’s just that we would prefer to solve them with money, rather than wholesale reform. True, we are emotionally invested in the idea of a taxpayer-funded health service free at the point of use. It does not follow that the emotion is irrational. […]
The instincts of the British public – that the NHS is precious and worth protecting – might be more rational than they appear to reforming zealots. […] People ideologically opposed to the institution are fond of saying there is a “taboo” about NHS reform. Plenty of taboos […] are there for a reason.”
What a normal Guardian article would do, at this stage, is to present some sob story about how the NHS has saved someone’s life, and then contrast that with something about Americans being bankrupted by medical bills, or about healthcare in the Victorian Age. Not this article. Impressively, Gill gives an accurate account of her opponents’ preferred alternative:
“A model favoured by reformers tends to be the social insurance system – used by the likes of Germany, Austria and the Netherlands – in which citizens must buy health insurance and the state covers those who cannot afford it.”
Correct. That is the alternative we are talking about.
So what, then, is the author’s problem with that alternative? This is where the article gets a bit messy.
The transition
On the one hand, Gill claims:
“There is no magic about the social insurance system. […] Funding would just be switched around a bit.”
But then, she also asserts:
“Getting there would be hugely costly: overhauling the UK’s biggest employer would take years. The disruption would be considerable.”
So which is it? If introducing SHI just means that funding “would be switched around a bit”, why should it be so massively disruptive, risky, and time-consuming? And more to the point – why would Gill even bother opposing it?
But let’s ignore that contradiction. Gill is, of course, right to say that replacing the NHS wholesale with an SHI system would be a very major, system-level reform. It does not, however, need to be especially disruptive. The idea is not to shut down the entire system, and build a new one from scratch in its stead. It is to make one system morph into the other over time. There are precedents for that. The Czech Republic and Slovakia did precisely that in the 1990s: they inherited an NHS-type system from the old Czechoslovak Socialist Republic, which they then replaced, step-by-step, with the SHI systems they have today. East Germany did the same thing after Reunification, and they managed to complete that process within about five years. It is not beyond the wits of man.
Spending
But is it the solution to the UK’s problems? Gill accepts that SHI systems achieve better outcomes, but attributes that to other factors:
“European countries that use social insurance models […] spend more than the UK. […] The NHS receives much lower funding, and has been run down for longer, than many of its high-achieving peers. It is also relatively efficient.”
There is, again, a contradiction here. If the NHS is so efficient, why would it need the same level of funding as SHI systems? What is “efficiency”, if not the ability to do the same with less? But let’s return to the efficiency argument later.
On spending: it is not true across the board that SHI systems spend more. Last year, the UK spent 11.3% of its GDP on healthcare. That is about the same as the Netherlands (11.2%), Switzerland (11.3%) and Austria (11.4%), and slightly more than Belgium (10.9%), although quite a bit less than Germany (12.7%).
Until quite recently, though, there really was a funding gap between the NHS and its Continental SHI peers, and in absolute terms, there still is. But the reason why some SHI systems spend more, overall, is simply that they are more generous systems. They cover a range of services that improve patients’ wellbeing, but that are not, strictly speaking, clinically necessary. For example, in the German system, you can get a 2-to-3-week stay at a health spa, fully paid for by your health insurer, every 4 years, if a doctor approves it. That is nice to have. But it is not the reason why they have higher survival rates for all kinds of conditions.
To put it that way: it would be unreasonable to criticise Ryanair for the fact that they do not offer the same extras and the same level of comfort as Qatar Airways. But if Ryanair flights were constantly delayed and cancelled, we would not accept “underfunding” as an excuse. We don’t expect them to be luxurious, but we still expect them to get the basics right.
Efficiency
Back to the claim about the NHS’s supposed superior efficiency. Gill argues:
“[S]ocial insurance might make things worse. It would be less efficient […] – consider all the claims, payments and risk calculations that would have to be made.”
It is true that SHI systems have to do all that. But so does the NHS. That is common to both. The fact that it is all happening within a single organisation does not mean that there are no claims and no payments that need to be processed.
Even within a tiny and relatively informal organisation like the IEA, there are separate internal budgets, and transfers between them. The same is true, but on an infinitely greater scale, within the NHS, where thousands of different units contract with each other, bill each other, and process payments between each other. There are differences in degree, but the relations between different units within the NHS are, in this respect, not qualitatively different from the relations between the different stakeholders of an SHI system.
The efficiency of a health system is hard to estimate, and the latest estimate I have seen is now out of date. But it was not kind to the NHS, and I cannot see what exactly has changed in the meantime (except for the worse).
Conclusion
Whatever my queries with the specifics of the article, the fact that the Guardian is acknowledging the existence of the pro-SHI position, that they are representing it correctly, and that they are debating it in a non-hysterical, non-accusatory way – marks a huge change. There is no way they would have done this just two years ago.
For years, those of us on the pro-SHI side have been complaining that it is impossible in Britain to have a reasoned argument about the pros and cons of different health systems. That is no longer quite true. This article represents just that: reasoned disagreement. We may be, at long last, be starting to have that discussion now.
What took you so long, Guardian? Was that so hard?
NHS vs SHI
Guardianistas are usually comically bad at understanding what their opponents actually believe. This article is refreshingly different. It starts with an amazingly accurate summary of the position of the NHS’s critics:
“A popular theory has emerged in recent years. It goes like this: when it comes to the National Health Service, Brits suffer from a species of Stockholm syndrome. We are so deep in collective delusion that we can’t, or won’t, see its miserable faults, let alone countenance the sort of changes that could actually save it. Swapping to a different sort of service […] would be better, but blinkered by mass hysteria our people simply will not have it. Having at one point rashly decided to make the NHS our “national religion”, we have for some time now been worshipping a god prepared to abandon his flock on a trolley in a corridor for 16 hours.”
Correct. That is exactly what I believe.
The author, Martha Gill, then proceeds to offer a defence of NHS sentimentalism:
“[T]here is something rational about [our attachment to the NHS]. […] Brits are not blind to the institution’s problems – it’s just that we would prefer to solve them with money, rather than wholesale reform. True, we are emotionally invested in the idea of a taxpayer-funded health service free at the point of use. It does not follow that the emotion is irrational. […]
The instincts of the British public – that the NHS is precious and worth protecting – might be more rational than they appear to reforming zealots. […] People ideologically opposed to the institution are fond of saying there is a “taboo” about NHS reform. Plenty of taboos […] are there for a reason.”
What a normal Guardian article would do, at this stage, is to present some sob story about how the NHS has saved someone’s life, and then contrast that with something about Americans being bankrupted by medical bills, or about healthcare in the Victorian Age. Not this article. Impressively, Gill gives an accurate account of her opponents’ preferred alternative:
“A model favoured by reformers tends to be the social insurance system – used by the likes of Germany, Austria and the Netherlands – in which citizens must buy health insurance and the state covers those who cannot afford it.”
Correct. That is the alternative we are talking about.
So what, then, is the author’s problem with that alternative? This is where the article gets a bit messy.
The transition
On the one hand, Gill claims:
“There is no magic about the social insurance system. […] Funding would just be switched around a bit.”
But then, she also asserts:
“Getting there would be hugely costly: overhauling the UK’s biggest employer would take years. The disruption would be considerable.”
So which is it? If introducing SHI just means that funding “would be switched around a bit”, why should it be so massively disruptive, risky, and time-consuming? And more to the point – why would Gill even bother opposing it?
But let’s ignore that contradiction. Gill is, of course, right to say that replacing the NHS wholesale with an SHI system would be a very major, system-level reform. It does not, however, need to be especially disruptive. The idea is not to shut down the entire system, and build a new one from scratch in its stead. It is to make one system morph into the other over time. There are precedents for that. The Czech Republic and Slovakia did precisely that in the 1990s: they inherited an NHS-type system from the old Czechoslovak Socialist Republic, which they then replaced, step-by-step, with the SHI systems they have today. East Germany did the same thing after Reunification, and they managed to complete that process within about five years. It is not beyond the wits of man.
Spending
But is it the solution to the UK’s problems? Gill accepts that SHI systems achieve better outcomes, but attributes that to other factors:
“European countries that use social insurance models […] spend more than the UK. […] The NHS receives much lower funding, and has been run down for longer, than many of its high-achieving peers. It is also relatively efficient.”
There is, again, a contradiction here. If the NHS is so efficient, why would it need the same level of funding as SHI systems? What is “efficiency”, if not the ability to do the same with less? But let’s return to the efficiency argument later.
On spending: it is not true across the board that SHI systems spend more. Last year, the UK spent 11.3% of its GDP on healthcare. That is about the same as the Netherlands (11.2%), Switzerland (11.3%) and Austria (11.4%), and slightly more than Belgium (10.9%), although quite a bit less than Germany (12.7%).
Until quite recently, though, there really was a funding gap between the NHS and its Continental SHI peers, and in absolute terms, there still is. But the reason why some SHI systems spend more, overall, is simply that they are more generous systems. They cover a range of services that improve patients’ wellbeing, but that are not, strictly speaking, clinically necessary. For example, in the German system, you can get a 2-to-3-week stay at a health spa, fully paid for by your health insurer, every 4 years, if a doctor approves it. That is nice to have. But it is not the reason why they have higher survival rates for all kinds of conditions.
To put it that way: it would be unreasonable to criticise Ryanair for the fact that they do not offer the same extras and the same level of comfort as Qatar Airways. But if Ryanair flights were constantly delayed and cancelled, we would not accept “underfunding” as an excuse. We don’t expect them to be luxurious, but we still expect them to get the basics right.
Efficiency
Back to the claim about the NHS’s supposed superior efficiency. Gill argues:
“[S]ocial insurance might make things worse. It would be less efficient […] – consider all the claims, payments and risk calculations that would have to be made.”
It is true that SHI systems have to do all that. But so does the NHS. That is common to both. The fact that it is all happening within a single organisation does not mean that there are no claims and no payments that need to be processed.
Even within a tiny and relatively informal organisation like the IEA, there are separate internal budgets, and transfers between them. The same is true, but on an infinitely greater scale, within the NHS, where thousands of different units contract with each other, bill each other, and process payments between each other. There are differences in degree, but the relations between different units within the NHS are, in this respect, not qualitatively different from the relations between the different stakeholders of an SHI system.
The efficiency of a health system is hard to estimate, and the latest estimate I have seen is now out of date. But it was not kind to the NHS, and I cannot see what exactly has changed in the meantime (except for the worse).
Conclusion
Whatever my queries with the specifics of the article, the fact that the Guardian is acknowledging the existence of the pro-SHI position, that they are representing it correctly, and that they are debating it in a non-hysterical, non-accusatory way – marks a huge change. There is no way they would have done this just two years ago.
For years, those of us on the pro-SHI side have been complaining that it is impossible in Britain to have a reasoned argument about the pros and cons of different health systems. That is no longer quite true. This article represents just that: reasoned disagreement. We may be, at long last, be starting to have that discussion now.
What took you so long, Guardian? Was that so hard?
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