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Mark Britnell: the NHS funding model is no longer 'resilient'

A sophisticated discussion on how – and how much – the health service should be funded is badly needed to avoid undoing two decades worth of progress.

The expedient concessions to the Health Bill made by the government in the face of accusations of “privatisation” could be strategically limiting for the NHS.

Equally, the rapid jettisoning of price competition policy without any rational debate may also deny the NHS the opportunity to realise efficiencies in the short term.

It is no good pretending that the health sector can simply turn over and have its belly tickled to produce the scale of savings required for healthcare reinvestment.

It has been well chronicled that public sector productivity in the UK has been 20 per cent less than the private sector over the last decade, a lost opportunity in excess of £70bn. Repeated studies from the National Audit Office and Audit Commission demonstrate that equivalent services could be provided for less cost.

All over the world, the size of the state has been increasing but the global recession has forced all countries to think about the right balance between civil society and public expenditure.

In 1870, the UK committed 9.4 per cent of GDP on government spending; by 2009 this had risen to 47.2 per cent. Globally, the average increased from 10.4 per cent in 1870 to 47.7 per cent in 2009.

People are marching against public service cuts but the “smaller state, bigger society” initiative will only reduce the size of Britain’s state to its 2008 level.

The heated discussions over how revolutionary the health reforms actually are may be misguided. They are missing a much bigger point: namely, are the reforms the right ones in the face of ageing demographics, increasing long term conditions, rising consumer power and costly technologies and pharmaceuticals?

Countries all over the world have different blends of state payment and self payment, compulsory and voluntary insurance, high and low taxation, private and public investment and private and public provision. It may well be the case that truly radical healthcare reform in the future will look at the best balanced portfolio as citizens, taxpayers and patients debate the rights and responsibilities of individuals.

Eastern promises

It appears that countries that have a mixed blend of public and private provision, co-payment and social insurance are possibly more capable of providing resilient healthcare systems.

It is no coincidence that the Netherlands and France – two of the highest performing health systems in the world, as ranked by the World Health Organisation and Commonwealth Fund – have mixed insurance and provision systems, both underpinned by principles of social solidarity and universal coverage guaranteed by the state that lean more upon Bismarck than Beveridge.

It is also the case that developing countries are trying to learn from, and leapfrog, mature Western systems.

For example, Singapore, a small state of only 5 million people, is generally considered to run effective public services for only 19 per cent of GDP. Singaporeans value their public services but many are provided by private sector organisations.

The country’s economic growth, currently standing at around 8 per cent a year, is partly achieved by “good, cheap government”. The prime minister, Lee Hsien Loong, believes that the West’s mistake has been to set up “all you can eat” welfare states: because everything at the buffet is free, it is consumed voraciously.

Singapore’s approach, by contrast, is for the government to provide people with a sort of individual savings account that enables them to take greater personal responsibility. The central provident fund enables people to pay for their own housing, pensions, healthcare and even their children’s tertiary education. Singapore only spends 3.9 per cent of its GDP on health, yet its average life expectancy is over 80 years.

Singapore offers universal healthcare coverage with a financing system anchored on the twin principles of individual responsibility and affordable health for all. Market based mechanisms promote competition while tiered insurance covers all citizens. Provision is mixed, with the public sector providing approximately 80 per cent of care in the acute sector while the primary care sector is dominated by the private sector. It’s not ideological but it’s practical and it works.

So, back to the NHS. The debate about price competition was disingenuous. First, many areas of clinical activity do not have a tariff so price competition already exists. Second, many commissioners negotiate around tariff price to deliberately support organisations or services. It wasn’t price competition that confronted Mid Staffordshire: strong but narrow performance management, a distracted board with big financial challenges and weak internal clinical accountability all contributed to its problems.

Selective competition could improve some services and reduce costs. The rhetoric surrounding the Health Bill could potentially undermine progress that has been made over the past two decades. In the UK, we are dogged by polemic political hyperbole when a more sophisticated discussion might better serve the long term interests of the NHS and our global competitiveness.

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