Time to end the cult of the NHS

Citizens have a right to ‘qualified medical care provided by state health institutions’. Most Brits would agree with that statement. It comes from article 42 of the Constitution of the USSR. In practice, it was the right to be treated in hospitals of which in 1989, 20% did not have piped hot running water. 7% did not have a telephone. 17% had inadequate sanitary facilities. Almost 80% of Russian AIDS sufferers contracted the disease in a hospital. The right was a right to equal access, free at the point of delivery, lousy medical care. Socialised medicine in action.

The dogmatic attitude to public health care in the UK is leaving us in a similar predicament: egalitarian principles leads to free-at-the-point-of-use, but substandard medical care. For example, the UK ranks lowest in Western Europe for cancer survival, with a quarter of cancer patients dead in 6 months due to late diagnosis. In an often cited Commonwealth Fund report the NHS came out on top, but peculiarly scored high in qualitative assessments such as ‘Equity’ and ‘Patient Centred Care’ but poorly in the only quantitative, and somewhat more important, category ‘Healthy Lives’. The fund, presumable with a straight face, wrote: ‘the U.K. continues to demonstrate strong performance and ranked first overall, though lagging notably on health outcomes’. A recent report commissioned by MP Owen Paterson and his think-tank UK2020 found that ‘46,413 people die each year because they were treated on the NHS, rather than by the healthcare system with the best health outcomes in the world.’ The Health Consumer Powerhouse, a Swedish think tank, ranks the NHS 14th in Europe. Top of the list is the Netherlands, which has an insurance based system and mostly private for-profit run hospital.

We should not be surprised. The introduction of competition is the only way to encourage excellence in the health care sector. But the quasi-religious reverence for the NHS is a difficult hurdle to overcome.

Now it is true that Britain Spends less on health care per capita than many other developed countries. In fact, the UK ranks 16th amongst the OECD countries. However, the UK ranks only 26th in the number of doctors per capita. The number of MRI and CT scanners are lower than other developed countries. The media reports daily on a health service stretched beyond breaking point. All agree that something needs to be done, but having an actual debate of real alternatives is deemed outrageous and sacrilegious. The debate in Britain is one-sided in favour of a publicly run health service and demonizes the profit motive, in general but especially in health care. Banners with ‘Patients before profit’ are commonplace at pro-NHS demonstrations – but we know this is a nonsensical tag line, implying a typical false choice where in fact there is no choice. In a free market, good patient care and profits are self-evidently complimentary – one leads to the other. The proposed conflicting forces are plainly nonsensical in other industries. A good, competitively priced product equates profit.

In a free health care market, a plurality of providers would compete like in any other market to offer the best care for the most competitive price. The feared profiteering is obviously not possible in a truly competitive market. Only the best providers would survive.

The search for profits is exactly what drives innovation and excellence in other industries. In the NHS, incentives to changes in the delivery of health care is only encouraged by budget restrictions. But change doesn’t necessarily mean improve, especially when there is no competing supplier. Pressure for increased efficiency has occasionally forced the NHS to seek 3rd party providers, to howls of ‘backdoor privatization’ from the left (and the right for that matter). Andy Burnham, then shadow heath secretary, complained in 2015 of how outsourcing certain services in the NHS was a ‘race to the bottom’. ‘It is clear that quality is not the deciding factor when people with poor care records are winning the contracts’, he commented. But why would it be? The bureaucrat who is in charge of purchasing the care is not the end client, he is spending tax payer money on buying services for people he doesn’t know. We remember Milton Friedman’s famous words about spending other people’s money on other people: ‘Don’t economize and don’t seek highest value’.

Recent years have seen examples of poor patient care, both from the NHS and from private providers. With no incentives to satisfy the customer, incidents of substandard care within the NHS should not surprise. But to the British mainstream, in-house NHS examples are outliers whereas substandard care from private providers are horrifying examples of ‘profiteering’. The truth is that we should not be surprised when a state monopoly delivers a bad product. Likewise, we should not be surprised when the state uses taxpayer money to purchase substandard services.

Another inherent problem with public health care is the allocation of scarce resources without a price mechanism. In the UK, NICE (National Institute for Health and Care Excellence), a quango, pontificates over what treatment is available on the NHS. Prioritization is necessary, but random. The public purse funds certain cosmetic surgery but refuses funding to some lifesaving medicines and procedures. This is obviously unavoidable. Resources are scarce, not all can receive treatment. But who gets the treatment? The NHS is supposed to promote equality in health care, but it is an illusion: If NICE hasn’t approved treatment of your illness, no treatment is available on the NHS. If, like many propose, private hospitals would be abolished, care for a non-approved illness would not only not be available for free, but not available at all. Suffer from the wrong disease? Sorry, nothing to be done. It is clear that the NHS does not, as it is often portrayed, offer unimpeded access to health care, only to certain, approved health care. The recent debate about the pending funding crisis in the NHS touches upon how prioritization will become ever more necessary. Resources are scarce and demands are rising. NICE will have a big job on their hands – one can only hope that the treatment one needs falls in the ‘approved’ category.

Even for patients suffering from an ‘approved’ ailment, does equity exist? Evidence suggests not. Your post-code may determine if you live or die. In addition, it is acknowledged but not kosher to say that not the richest, but the loudest patient gets the best treatment: patients who complain the most are more likely to move up the waiting list or access the best care. Wherever one looks, the idea of equity in healthcare is patently untrue in the NHS.

It is important to note that the funding of a service is separate from the delivery. One could imagine a private health care sector funded by the public purse. Each citizen would get a voucher and could then shop around for the best care. This would quell the protests from the egalitarian crowd demanding equal access to health care. It is difficult to see how a voucher system would work in practise, though. A fully paid voucher would encourage providers to overcharge – this is what is happening in the USA, and a reason why health care spend is so much higher there than anywhere else in the world. Even with an element of patient co-payment, the public contribution could in effect establish a floor under which the price couldn’t drop.

In the event, private insurance is a much better approach, as it avoids a major issue with publicly funded health care. Funding via general taxation generates a classic moral hazard problem: the state is subsidizing bad lifestyle choices by paying for the consequences. Eat too much, and the state will pay for your gastric bypass. Pursue dangerous sports without insurance, and the tax payer will pick up the bill for your helicopter ride and wheelchair. Smoke, and the public purse will fund your cancer treatment. As a remedy, the party that bears the financial cost of the individuals choices, the government, have to resort to legislation to counteract the reduced incentives to lead a healthy life style. Smoking ban, sugar tax, alcohol tax etc. follows. Advocates for minimum alcohol pricing legislation are for example using the NHS funding crisis as an argument: we can’t afford to treat alcohol related illnesses so we need to prevent them. We are left with a less free, more unhealthy society.

A fully developed health insurance market could provide the cover to suit the individual. Some might chose to pay high premiums to mitigate any and all risks. This might be the wrong choice for others. It is however clear that there would be a big role for charity to provide health care for those unable to afford adequate insurance.

In any case, a lack of patient co-payment obviously leads to overuse. NHS A&E are notoriously overcrowded with anything from legitimate emergencies to sore throats and shoulders. A survey revealed that almost a fifth admitted to misusing A&E for non-emergency care. It is no wonder that despite ever increasing funding, the NHS is in a permanent struggle to meet demand.

With an aging population, increasing prevalence of chronic conditions and new, expensive treatments more and more resources from an increasingly broke state will have to be allocated to health care. Currently demand for health care rises by 5% per annum and the health service is screaming for more resources. With GDP growth currently at around 2%, this is clearly unsustainable. Demand is simply outstripping supply and it will only get worse. The resources are not there to meet the growing demand. This is a phenomenon that one doesn’t see in a free market. Demand will always come with resources: if users are not willing to pay anything for the good, it is not real demand. In a publicly funded system there is obviously no way of knowing what the real demand is, as there is no price mechanism. All we hear is a constant call for more money and it will only grow louder.

This should make a serious discussion of alternatives imperative, but in the UK, no discussion of an alternative to the NHS is being had. In no other country is public healthcare approached with the same dogmatism. Big state, social democratic beacons like Denmark and Sweden allow a much more prominent role for private providers. In Denmark, ambulance services have for many years been outsourced to private providers. In the UK, the unions attacked ‘creeping privatization’ when it emerged that use of private ambulance operators had increased to deal with ‘peak demand’. Sweden has been a trailblazer in health care privatization. The results are unsurprisingly encouraging, but in the UK, even the so-called free-market right wing is petrified of having the discussion.

The NHS is the 5th biggest employer in the world, a bureaucratic, inefficient behemoth, infested with the inherent problems any state owned industry would encounter. It is high time that an alternative is found; the truth is that the NHS is both morally and financially bankrupt. It should be impossible to defend the maintenance of a sub-standard health-care system, whit proven over-mortality compared to its peers, solely for ideological reasons. But in the UK it’s not only defended, it is never even questioned. The cult of socialised medicine is regrettably as strong as ever.

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