Does any reader of this column still believe the once
conventional wisdom about
Unfortunately, neither of these assertions is correct. Among the
rich industrial countries, only the
Healthcare should be available to all, regardless of ability to
pay. However, the principles on which the NHS is based, universal healthcare
financed entirely out of tax revenues and free provision at the point of
delivery, no longer make sense. Research and development has created effective,
but expensive, treatments that are not affordable for all - and this makes free
universal access at the point of delivery impossible.
Currently, what determines your quality
of care in the NHS is your education, intelligence and connections. While the
"aristocracy of pull" (in Ayn Rand
The NHS is the sacred cow of
The NHS must go. It should be replaced with a system that
guarantees good quality healthcare to all, but one which is - at least to a
much greater degree - financed through payments for service. A system of
mandatory health insurance of the kind found in the
In the spirit of the Dutch system, we propose that a committee
of experts should determine the benchmark standard of healthcare. The
government should then design a default health insurance plan that meets this
benchmark. This plan, as well as plans that offer additional care, can be
offered in a competitive market by regulated insurance companies that negotiate
fees for services with healthcare providers. Everyone must have a health
insurance plan that is at least as good as the default plan. The government
should pay the premia for people who cannot afford them; individuals with the
income and desire to purchase coverage that exceeds the standards of the benchmark
plan may do so. Health insurance should not be tied to employment (through tax
or other incentives) - one of the singular weaknesses of the
Insuring people with known pre-existing conditions at a
reasonable, affordable rate is often not commercially viable. There are two
solutions to this. First, those who would be uninsurable in a purely private
insurance market could be guaranteed the default insurance package, with the
government providing excess payments to the insurance companies to make this
financially viable. Second, those with pre-existing conditions could be put in
an "assigned risk pool" at a capped premium, the way bad drivers
currently are in many
It is fair that those who have the means to pay for their
healthcare should do so. It is efficient some of the payment should be "at
the point of delivery". The argument that healthcare should be free at the
point of delivery because it is essential for life and human dignity is silly.
Food is essential for life and human dignity but we do not expect supermarkets
to hand it out for free. Thus, in a sensible healthcare system, individuals
should pay for their healthcare both through insurance premia and through (co-)
payments for services, eg 20pc of the cost of most services up to some maximum
amount each year.
A universal mandatory insurance scheme requires competition
among insurance providers to produce reasonably efficient outcomes. But, some
inefficiency is inevitable when the suppliers of the services (the healthcare
providers) know much more about the services than the consumers (the patients).
Having a public or not-for-profit health insurance provider alongside the
private providers might be useful for cost control. In addition, there is an
efficiency argument for preventive health services to be funded publicly and
offered free at the point of delivery; this includes inoculations and
vaccinations, dental check-ups for children, eye tests for everybody and a
range of other services.
During the past five years, just under
two additional percentage points of GDP have been spent on improving the NHS.
This has been poor value for money, with most of the additional resources going
into the pay packets of the incumbent providers and with little apparent
improvement in accessibility and care. The provision of medical care need not
be done by the public sector. It may be more efficiently done by the for-profit
private sector, or by non-profit NGOs and similar organisations with charitable
status. Let them all compete on a level playing field and may
the best provider gain market share.
Finally, we would depoliticise the oversight and regulation of
healthcare. The amount spent on healthcare by the state must remain a political
decision. The allocation of public funds could be delegated to a group of
non-elected experts, appointed by the Secretary of State for Health and
accountable to Parliament. A few months ago, Jim O
Willem H Buiter CBE, FBA is Professor of European
Political Economy at the London School of Economics; Anne C Sibert is
Professor of Economics at Birkbeck College