Published: 01/12/2005 Volume 115 No. 5984 Page 21

The issue of patient charges was again being discussed by the Commons health select committee last month. A parallel inquiry is also under way in Scotland, with Holyrood's health committee examining the implications of a private member's bill arguing for the abolition of prescription charges. Meanwhile, in Wales the decision has already been taken to phase out prescription charges by 2007.

MSP Colin Fox, whose prescription charge abolition bill was introduced earlier this year, has described charges as a 'tax on the sick' and the current system of exemptions as 'irrational, illogical and acting against the founding principles of the NHS'. Social Market Foundation chair Lord Lipsey delved even deeper into the thesaurus of hyperbole to describe charges as 'a dog's dinner lacking any basis in fairness or logic and stuffed with anomalies and inconsistencies'.

Both might also have added that if dental and prescription charges are meant to deter 'frivolous' or unnecessary demand, levying them on patients misunderstands the basic economics of dental and prescription medicine. If some deterrent incentive is thought to be needed to combat the 'moral hazard' of a service unrationed by price, then better to charge those actually making the demand (albeit on behalf of patients) - which in this case are dentists and GPs.

For those who want to abolish charges, there are two main arguments they have to win. The first is that there are some services that should not be considered part of the basic NHS 'package of care'. That is, while they may be delivered by medically qualified people in 'clinical' settings, they are not 'medical'. There is considerable scope for argument on this, however.

The NHS has never, systematically, defined what is in and what is out, instead addressing this question piecemeal. Almost identical dental work might be delivered completely free (in hospital, for example, as part of treatment following an injury) or incur a charge covering part of the actual costs (a white crown for teeth at the front of the mouth), or at the full market price (a white crown for teeth at the back of the mouth).

The second argument is that moving a service out of the NHS and into a competitive private market encourages innovation and improves quality. Even if such benefits materialise, the question is whether they are worth the sacrifice - measured in the market price to be paid and the increase in inequality of access.

Those in favour of charging (and deregulation) argue that the poor can be protected from the adverse consequences of such rationing by a system of exemptions and sliding charge scales.

Which is what started this whole argument. .

John Appleby is chief economist at the King's Fund.