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Ken MacIntosh: The NHS desperately needs some private sector disciplines


We are told that to dismantle the NHS would be immoral. That our health monolith represents community, even though vast, impersonal monoliths are anathema to communitarianism. The NHS is, apparently, a deeply moral thing. There are, however, other ways of looking at morality. It is moral for an individual to provide for himself and his family. And the knowledge that one is, in part, responsible for one’s own mortality is chastening. It contributes to changes in behaviour; it reduces what the experts refer to as ‘moral hazard’, whereby people take risks with their own wellbeing knowing that free healthcare will be there for them.

Some ideologues on the Right yearn for healthcare to be thrown to the free market. US politicians such as Tom Coburn and Ron Paul cite pre-Medicare America as a shining example of how laissez-faire healthcare can flourish, obliterating moral hazard, benefiting everybody without a federal dime in sight. But nothing is ever easy. This 1963 (pre-Medicare) survey found that hospital expenses were “beyond the economic capabilities of most aged persons”, and that the average single hospitalisation cost the equivalent (in today’s money) of $10,000. Many elderly patients “never [recovered] from the economic effects of a single hospital admission”. For all its downward pressure on prices, the free market didn’t push down hard enough. In Britain the average annual income is £28k. The idea of fully surrendering healthcare to the free market would terrorise many. It will never happen.

But Medicare, introduced in 1965 to provide elderly Americans with federally-funded health insurance, also exemplifies another truth: that when the State exposes its white, flabby belly to the market, fangs descend. In the words of one biographer of the then President, Lyndon Johnson, the Medicare legislation placed “no inhibition on the freedom of doctors to raise charges each year and submit their higher fees [to be paid with public money]”. The State had signed a blank cheque. Over the next four decades, expenditure on the programme would rise by over 23,000 per cent. Such was the invidiousness of the legislation (as described in this Congressional report), that when government tried to rein in expenditure in the 1980s, by replacing open-ended reimbursements with fixed payments for a given treatment, the doctors got around it by slashing inpatient times, whilst simultaneously increasing the volume of patient visits and individual treatments. Apparently, we need not fear the God complex in doctors, but rather, the Arthur Daley complex.

So: NHS badfree market badpublic health insurance bad. Where do we go from here? How to achieve that seemingly paradoxical aim of marrying the discipline of a profit-seeking private company with patient treatment plans that have not been shaped by profit-seeking?

There has been some positive change in the NHS (in England) over the past thirty years, all centring upon an idea that health economist Alan Maynard had previously referred to as the need to create “an internal market” within the health service. A sort of pseudo-privatisation which has chimed with much subsequent government policy, from Kenneth Clarke’s 1991 health reforms, to the 2012 Health and Social Care Act, which introduced GP-led commissioning groups. However, in 2013 the Government lost its nerve. The ‘section 75’ regulations, which would have made it a requirement to put all NHS contracts out to competitive tender, as well as allowing regulators to force the issue, were watered down (the issue causing friction within the Coalition Government). As a result, NHS spending on private providers actually slowed down over the following two years. This figure has since grown, but use of the private sector still accounts for just over 6 per cent of NHS spending.

So, here are some ever so ‘umble suggestions:

  • Unwater-down those 2013 ‘section 75’ regulations: put all NHS contracts out to competitive tender.
  • Set up a system of upfront payments for certain non-urgent NHS services (which can, in certain cases, be claimed back), with exemptions for those who have good reasons for being unable to pay. Discourage trivial uses of the NHS.
  • Reintroduce National Insurance health stamps. Make the system truly contributions based. If you’ve contributed for ‘x’ amount of years, be you a cleaning lady or an architect, or have a good reason for not having paid in, you get the service. If you haven’t, you get a service. One that covers the essentials, but not your own hospital room with a TV. This is, of course, anathema to all on the Left. A ‘two-tiered’ health system. Stigmatising those at the bottom of society. But so what? There’s a reason why Aesop wrote a fable about an ant and a grasshopper.

All of the above, however, would still leave us with the NHS and its gloopy, mind-numbing hugeness. Any private involvement in healthcare provision would be forever hamstrung by a thousand NHS conditions. Political activists would lie in wait, ready to pounce on any private company that they judged to have transgressed in some way, demonising and harassing them. And any NHS failings would continue to land square at the door of the government-of-the-day; private companies would be at the mercy of political whim. It would not exactly be one giant petri-dish within which the private sector could development and take the odd calculated risk.

We need, ultimately, to make the final severance: have a contributions-based system, whereby fully paid-up NI stamps could be spent at a hospital of one’s choice, run by a private company. The government would, of course, have a role to play in monitoring price inflation versus company profits/dividends/salaries/bonuses, so as to avoid the US situation where doctors revel in grotesque and unmerited wealth made at the expense of ordinary punters. But better the government does that than everything.

[Please note: I am writing primarily about English healthcare. Up here in Scotland, where I work in the NHS, we are still fully Sovietised. Indeed, our government is committed to an ideological and rationality-free “clampdown” on all NHS spending in the independent sector].

(Image: Garry Knight)

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Ken MacIntosh
Ken MacIntosh
Ken MacIntosh is an NHS psychiatric nurse and is married with one daughter. Ken is interested in politics and mental health issues.

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