By Alfie Botelho (BSc Business Economics)
Since its foundation in 1948, the NHS has been possibly the most cherished institution in all of Britain; this is expressed in many ways, from the widespread fawning over our healthcare system from politicians of all persuasions to the weekly applause for NHS workers that many across the country have been partaking in during the COVID-19 pandemic. So, the suggestion that this system is fundamentally flawed is one which would be met with robust opposition – perhaps even derision. But, with waiting times for GP appointments and A&E treatment both alarmingly high and increasing still – whilst the NHS receives huge and increasing levels of funding – the idea must be considered that the NHS in its current form is inherently unequipped to efficiently function as a modern-day healthcare system should. Is it time for change?
Let us briefly outline what the healthcare system in the UK is, how it works and how it is funded. Firstly, the UK like most developed countries has a universal healthcare system – this simply means that all UK residents are assured access to healthcare. More specifically, we have a single-payer healthcare system, meaning the system is funded by a single public system. Further still, the particular model which the UK’s health system takes on is the Beveridge Model – devised by economist William Beveridge, author of the 1942 Beveridge Report which ultimately led to the creation of the NHS. This model of healthcare system entails the government providing healthcare for all citizens, for which this is payed through income tax. With this funding model, progressive taxes ensure that healthcare is provided to all regardless of their financial means – healthcare is viewed as a human right. It is worth mentioning, private healthcare does exist in the UK; the option is there for those who have the means to pay a premium for a better standard of care. Bupa is an example of a private healthcare provider in the UK. Likewise, it must be noted that not all NHS services are free (although primary care is) – examples of patient charges include dental care and prescription charges (as outlined by The King’s Fund in their ‘NHS in a nutshell’ study). That said, overall the UK’s system is true to the Beveridge Model; private healthcare is optional and according to the Office of Health Economics patient charges constitute just 1.2% of the NHS funding (as of 2011). Although British in its inception, the Beveridge Model has since been adopted by Spain and New Zealand among others.
Unsurprisingly, a healthcare system which is owned and run by the state is a massive expense for the government. Outlined in the 2020 Budget, health spending for 2020-21 is forecast to be £178 billion (over 19% of the whole budget), with year-on-year increases expected to reach £34 billion by 2023-24 (it should be noted that expenditure increases of a large magnitude is necessary just to maintain the same level of investment when accounting for inflation, so just because spending figures are increasing this doesn’t necessarily indicate an increase in investment in real terms). So, what is the taxpayer receiving in return for this indefinitely increasing expense? Let’s take A&E waiting times as a metric. NHS England aim to either admit, transfer or discharge every A&E patient within 4 hours (health is a devolved matter in the UK, meaning the NHS operates separately between the four constituent nations – in Northern Ireland it doesn’t exist under the NHS brand – so there is an issue with practicality of compiling UK-wide figures). For type 1 patients (meaning patients we would typically associate with A&E; as opposed to single specialties such as dental emergencies or minor injuries), this was a target which in the past could be met close to 100% of the time – quarterly figures from 2010 through mid-2014 remained above 90%. However, this rate has been falling over time, and as of Q4 2019-20, only 73.2% of type 1 patients have been admitted, transferred or discharged within the 4-hour target. It should be remembered that this is one of many potential gauges of NHS effectiveness and any conclusions drawn from this measure alone should therefore be done carefully, but this has a lot of meaning in its own right. These patients, by definition, are in need of care with a considerable degree of urgency, and 4 hours is not an unreasonable target – that’s a long time to wait – so the fact that over the past decade NHS England has gone from being able to meet this target virtually all of the time to being able to meet it less than three times out of four is greatly concerning. This is happening over a time when funding has been scaled up year-on-year even when adjusted for inflation. This paints a very troubling picture for the state of healthcare in the UK not only right now, but in the future also.
So, what are the alternatives? Well, there is no one specific framework – even within general models every country has a system structured for their own needs, so every national healthcare system is different. So, let’s consider the Beveridge Model – is it an outdated model? Are other broad models more suitable for a country of the UK’s size in 2020 and beyond?
Firstly let’s look at the Bismarck Model, a system used by Germany and France among other countries. In such a model, healthcare is funded through mandatory insurance as opposed to taxation. Take Germany as an example. Individuals pay a statutory public health insurance. Those who make at least €60,750 per year can instead opt for private coverage. This system has some similarities to what we have in the UK already, in that public healthcare is mandatorily ‘paid’ in a progressive way, and individuals are able to choose private. The difference is largely in the role of the private sector, which has a more emphasised role in Germany, not only in its availability and usage, but many Bismarck countries have largely privately-run health organisations and workers.
An alternative option is to move to a Canadian-style system where the funding would not fundamentally change but the provision of healthcare would be done in the private sector (standards would be ensured through strict regulation). This would be seen as a midway point between the UK’s system than the Bismarck Model. It should be noted that the only notable developed country which deviates substantially from any of the aforementioned models is the USA. There is nothing to desire about healthcare in the USA; it is not universal yet more expensive for the government than any other healthcare system in the world.
Direct qualitative comparison on healthcare between countries is difficult; Germany do not record emergency waiting times like NHS England does, so instead a means of comparison would be to use a measure hospital capacity such as hospital beds per 1,000 inhabitants. The OECD reports that Germany has 8 beds per 1,000 as of 2017, compared to 2.54 in the UK. This is a massive difference, suggesting that Germany has a much greater capacity for patients than the UK. Interestingly, Canada has 2.52, slightly less than the UK. When comparing practicing nurses per 1,000 the UK was last of the three countries, having only 7.83 compared with Germany’s 12.93 and Canada’s 9.96. So, on the surface it’s clear that despite the NHS reputation within the UK for being ‘the best healthcare system in the world’, it most certainly isn’t the most bountiful.
Does this mean that the UK’s healthcare system is not as good as those of the other countries? No, how ‘good’ a healthcare system is would be a highly complex assessment to make (although indexes do exist), and density of resources is one of many facets to consider. Likewise, assessing which healthcare systems are performing the best is not necessarily indicative of their models regarding funding and provision. Therefore, there is an alternative explanation for the issues the NHS is facing; a simpler one.
Using the OECD’s 2017 figures, health expenditure per capita (at current PPP) was lower in the UK than for both other countries every year, as was its health expenditure as a percentage of GDP. Does it not make sense that the UK’s healthcare system is performing comparatively worse simply because less money is being invested into it continuously. One would expect that healthcare demand is not wildly different between the three large developed countries. So there is a simple equation here that less input will result in less output. Where the healthcare model retains relevancy to the question however is through the exploration of adopting a model which increases funding. But in the one which the UK has, there are already ways to increase funding – simply by the government increasing the budget allocated to healthcare, and to increase tax (or cut other spending) if more money is needed to achieve this. An insurance system works virtually the same way; increase the insurance rates to increase health expenditure.
To conclude, it is time for change – not to a new system, but better treatment of the current one.
References
All About Berlin, 2020. Public And Private Health Insurance In Germany: How To Chose?. [online] Allaboutberlin.com. Available at: https://allaboutberlin.com/guides/german-health-insurance
Department of Health & Social Care, 2019. Handbook To The NHS Constitution For England. [online] GOV.UK. Available at: https://www.gov.uk/government/publications/supplements-to-the-nhs-constitution-for-england/the-handbook-to-the-nhs-constitution-for-england.
HM Treasury, 2020. Budget 2020. [online] Assets.publishing.service.gov.uk. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/871799/Budget_2020_Web_Accessible_Complete.pdf.
NHS England, 2020. Statistics » A&E Attendances And Emergency Admissions 2019-20. [online] England.nhs.uk. Available at: https://www.england.nhs.uk/statistics/statistical-work-areas/ae-waiting-times-and-activity/ae-attendances-and-emergency-admissions-2019-20/>.
OECD, 2020. Health Expenditure And Financing. [online] Stats.oecd.org. Available at: https://stats.oecd.org/Index.aspx?DataSetCode=SHA>.
Office of Health Economics, 2013. Guide To UK Health And Health Care Statistics. [online] Ohe.org. Available at: https://www.ohe.org/publications/ohe-guide-uk-health-and-health-care-statistics.
Physicians for a National Health Program, 2020. Health Care Systems – Four Basic Models. [online] Pnhp.org. Available at: https://www.pnhp.org/single_payer_resources/health_care_systems_four_basic_models.php.
The King’s Fund, 2020. The NHS In A Nutshell. [online] kingsfund.org.uk. Available at: https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell
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