When the NHS was founded, it was a central part of the UK’s post-war social contract. Now, it is struggling to perform, and there are increasing calls for so-called ‘reform,’ which is often a euphemism for privatisation and the introduction of insurance-based funding.
They are calling for a fundamental change to the business model of the NHS — a public service, free at the point of use and funded through progressive taxation.
Responding to the Assault
A project supported by the 99% Organisation, Keep Our NHS Public, and others has examined the extent to which these arguments have merit. It concluded that they are factually unfounded and illogical — and that the damage they could do to the health of both the nation and its economy is enormous.
We pulled together a team of volunteers with expertise from NHS management and senior clinical roles in strategy, economics and financial analysis. This team produced a report, The Rational Policy Maker’s Guide to the NHS, to coincide with the seventy-fifth anniversary of the creation of the National Health Service.
The team analysed three questions: what works in practice, what has gone wrong in the UK, and what kind of system would be sustainable in the future?
Of course, healthcare systems are complex, and there are many ways to assess their performance. From the citizens’ point of view, there are three things we can ask of our healthcare system: we want it to be effective, equitable and, since we are taxpayers, efficient.
Of the many international benchmarks of healthcare performance, perhaps the most comprehensive are those produced by the Commonwealth Fund. In 2014, the Commonwealth Fund published an analysis of the NHS using data from 2011-2013. It found that in the early 2010s, the NHS was the world’s best healthcare system by some margin.
The benchmarking shows that the pre-underfunded NHS is the clear number one. Best on outputs — quality of care — best on efficiency, and excellent on equity. It found the UK was far from best on ‘healthy lives’, but that is due to the high levels of poverty and inequality, not the performance of the NHS.
It also shows a clear number eleven — the privatised US system, which is by far the worst in the developed world.
Over a longer time, the picture is similar. The UK has slipped in recent years and is no longer number one, though it was still number one as recently as 2017 — but overall, the UK has the best track record. This is because the UK system naturally scores very well on equity. A system which is free at the point of use and funded by progressive taxation is the best way of delivering equitable health care. It also scores extremely well on efficiency. Indeed, it has often been the most efficient system.
Looking around the world to see what works in practice gives a clear answer: the pre-underfunded NHS is the best model so far demonstrated in an advanced economy. But it is clear that the NHS is struggling today.
The Future of the NHS
In essence, the answer is simple: underfunding. Since 2010, we have been spending less than other advanced countries, spending a declining percentage of GDP on healthcare, and — most importantly — not keeping pace with the needs of the UK population.
There was a noticeable change in funding policy from 2010 when austerity was introduced by the Conservative-Liberal Democrat coalition government. Previously, as with other countries, the UK had been spending an increasing percentage of GDP on healthcare; since 2010, it has been a gradually decreasing percentage, and spending in the UK is now below almost all other advanced economies.
The result was inevitable: we now have fewer doctors and nurses and fewer hospital beds than almost all our peers, and the service levels we experience have dropped dramatically. From record waiting lists, rocketing A&E and ambulance waiting times, bed shortages, and poor pay and conditions causing an exodus of staff, it’s clear that the NHS is no longer performing as it did — and this is directly attributable to the impact of thirteen years of underfunding.
No healthcare system in the world could withstand such sustained underfunding.
So, a rational policymaker would have established both that the pre-underfunded NHS was the best model so far demonstrated in an advanced economy and that its underperformance in recent years is due to underfunding. On that basis alone, he or she might be tempted to conclude that the best strategy was to recommit to the fundamental business model of the NHS and to fund it properly.
The Cost of Underfunding
The NHS’s detractors make another unfounded and illogical claim: that with an ageing population, funding the NHS is no longer affordable; we have no option but to change to a different model.
The claim is unfounded because combining the Office for Budget Responsibility data on health spending by age and the Office for National Statistics population forecasts shows no such issue. The UK is wealthy enough to adequately meet the healthcare needs of an ageing population — choosing not to do so would be a political choice.
It is illogical because if the NHS, the most cost-effective system in the developed world, is unaffordable, then any proven system is unaffordable. A change to an alternative model would bring either higher spending or worse health outcomes or, like the US system, both.
It is the government’s policy of underspending which is unaffordable. The reason is simple: the economy is driven by people — specifically healthy people of working age. We currently have 2.5 million working-age adults unable to work due to ill health; that’s 7 percent of the total and rising fast. It is that trend that is unsustainable. If the NHS fails, the economy will fail with it.
The OECD long-term growth forecasts show that by 2060, the UK should expect a GDP of £3.8 trillion (vs £2.2 trillion today); current government health policies would massively undershoot the OECD forecasts — they would be economically ruinous for the UK.
To make the NHS once again the world’s leading healthcare system and to ensure a flourishing economy in the decades to come, the healthcare system needs funding, not ‘reform’. A rational policy would be to adjust healthcare spending to meet the needs of the population and end the crisis in the NHS.
Saving the NHS and the country’s economy with it is not a radical proposal. A short-term spike in spending to rebuild capacity, similar to what we saw take place in the years 1997-2009, followed by a return to steady state spending of around 9 percent of GDP, would correct course.
This is why we are calling for opposition parties to commit to the NHS: 1) Fund the NHS properly; 2) increase spending on prevention; and 3) use GDP growth to fund effective poverty reduction. This will save both the NHS and the UK economy.
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