The UK was experiencing an identity crisis, a growth crisis and a health crisis. The identity crisis lies in the lack of consensus about its place in the world. The growth crisis lies in stagnation in real income. The health crisis lies in distress National Health Service.
Sadly, the response from the government and many supporters has been magical thinking. Brexit and tax cuts are magical thinking for identity and growth crises. Changing NHS funding from general taxation to health insurance It is the equivalent of a health crisis.
Magical thinking is perhaps the worst feature of populist politics. Politicians promote simple solutions to complex problems. They have failed, further undermining the trust on which democracy depends.
So, let’s consider whether changing the financing model might fix the health system, and if so, how.
The main points in health economics are that it is a public good and a private risk. The first means that everyone benefits from living in a healthy community. The latter means that everyone but the rich needs insurance. But if healthy people who want to take the risk aren’t in the pool, insurance becomes prohibitively expensive, and insurance companies go to great lengths to exclude those most likely to need it. In this way lies the catastrophe of the United States – The most expensive and least effective health system in the world. The solution is coercion: everyone has to be in the insurance pool.
This is the solution offered by the United Kingdom, where the assembly is funded through taxation. In many other high-income countries, it is financed through what is called “social insurance”. But payments for it are mandatory. If he walks like a duck and quacks like a duck, then he is a duck. If a fee has to be paid for something, it is a tax. These fees are included in standard calculations of tax revenue. In fact, they are a significant portion of tax revenues in many countries.
At first glance, then, the shift from a tax-financed one to a system funded by compulsory social insurance is nothing more than a rebranding. When one looks at our current plight, it is hard to believe that this renaming could be anything more than magical thinking. One will still be charged a mandatory fee from the winnings. These would be (and are) taxes. Moreover, there is no reason to expect spending to be lower overall: France and Germany, for example, The UK spends the same share of GDP on health.
There are three arguments against this exclusion from social insurance as a solution to healthcare financing in the UK.
The first is that people will see a clearer link between revenue and spending on health, and therefore be happier about paying for it. However, expenditure cannot reasonably be determined in this way. If that is the case, it will have to be lowered just because there is a recession.
The second argument is that it would allow decentralization and depoliticization of decision-making in the field of health. What sets the NHS apart from most other systems is that it is a nationalized industry under strict political control. It is not hard to see that some of the decisions made as a result – such as that it is “efficient” to have few empty beds – undermine resilience in a system subject to large fluctuations in demand. Parallel resolution to Underinvestment It was a classic example of the “penny wise, pound for pound” approach I have long associated with the Treasury Department.
However, even if one thought in an abstract way that the UK health service might do better with a radical supply-side reorganization, the disruptions, both political and regulatory, would be enormous and possibly catastrophic. One has to start where it is. Revolutions usually fail. Conservatives are used to understanding that.
The third argument is that transformation may allow for greater choice. It may also be possible to add co-payments to the system, introducing a physical incentive component. But both can, if desired, be entered into the NHS. It is quite possible, for example, to enter a tested charge. In fact, it already exists – for medicines, for example. Whether fees will be a good idea is another matter: they will discourage both unnecessary and it is necessary Trips to the doctor. And they will hurt some much worse than others.
Moreover, it is also clear that the biggest failure lies not in the NHS itself, but in the underfunding of social care. This is why so many people block beds on the NHS. The solution is not to change the health system, but to increase spending elsewhere.
Is magical thinking the only thing this country can do right now? Why not try coherent thinking about the goals, structure and organization of care services, instead?