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It is 2015. The new health secretary for England sits at his desk, reflecting on his latest experience of the NHS.

The gene therapy for his potential Alzheimer's has been successful and has been paid for by the voluntary top-ups to his medical insurance. He is pleased that the doctors were courteous and willing to spend time talking with patients.

Just then, the video-phone rings. It is his boss - the EU commissioner for health. 'Just thought I should warn you,' she says. 'The next generation of anti-road-rage drugs will be on the market in six months. You'd better put some money aside.'

A fantasy future, maybe. But it is the sort of scenario we should be planning for now, according to the Nuffield Trust's report Policy Futures for UK Health: pathfinder.

The consultative document calls for 'new, long-term, strategic thinking' on issues that will affect the health service over the next 16 years. It singles out six key issues that need to be addressed. Two deal with performance measurement and workforce planning and training. The other four boil down to a single question, one that will not be new to those familiar with Healthcare 2000's 1995 report: how do you pay for universal healthcare at a time of burgeoning technical advances, a diminishing tax base and increasing demand from a well-informed, ageing population?

Like Healthcare 2000 - the controversial study headed by former NHS chief executive Sir Duncan Nichol - the Nuffield Trust wants debate about the health service's future and is calling for comments on its recommendations.

On finance it is pessimistic. 'Higher user-charges and increased rationing of services are likely if funding and expectations continue on current trajectories,' it says, going on to predict that the NHS will offer a more restricted range of services and explicitly ration more treatments.

Other solutions to the funding conundrum include raising taxes or funding some services from social insurance or voluntary health insurance.

The report argues that a fair and explicit system of rationing is needed, together with an 'early warning' system for new technology, something the Department of Health has already set up.

And while the government is keen to 'join up' policy-making on health, the environment, housing and social services at national level, it has devolved power and decentralised policy decisions.

Devolution to national assemblies may offer Scotland, Wales and Northern Ireland an opportunity to improve the health of their populations, the report says.

And though the NHS in Scotland received 25 per cent more cash per head of population, Northern Ireland 5 per cent more and Wales 18 per cent more than England in 1995-96, health outcomes were no better.

'Scotland has little, and Wales has no power to change funding levels,' it says. 'However, they can change the distribution of funding, healthcare planning, organisation and management. Wales and Scotland have proved good policy models for health, because of their smaller populations. They may provide alternative models for the provision of healthcare services.'

An umbrella body to enhance the sharing of information between the national health services will be needed, it warns.

Reaction to the complex, 90-page report has been mixed. Stuart Marples, chief executive designate of the Institute of Healthcare Management, says the paper is 'excellent' and will help the discussion on the future of healthcare 'enormously'.

But he adds: 'On a personal level, there are a number of features that I do not feel will actually happen as the report describes. For instance, I do not feel there will be 'an erosion of a distinct public service culture' nor do I see that culture as being contrary to efficiency or entrepreneurship. But that is all part of a legitimate discussion that follows the publication of such documents.'

Tim Jones, policy manager at the NHS Confederation, is disappointed. 'Credit to the Nuffield Trust for doing this because someone has to, but I can't put my hand on my heart and say: 'This represents radical thinking,'' he says.

'There are obvious recommendations like 'monitor public confidence in the NHS' or 'use trends in disease to plan healthcare services' which the report would be more effective without.'

The confederation would not support a funding model that would lead to a two-tier service and it would question the trust's wish to focus information policy on service users.

'The Information for Health strategy focuses on giving clinicians good access to quality information. We feel the key need is to empower the professionals to get access to the best qualityinformation.'

Mr Jones has other criticisms - primary care is not well addressed in the report, he believes - but other ideas have struck a chord. There is an urgent need to explore the tensions between central and local decision- making, he says, and more work should be done on long-term planning in the allocation of cash.

And he adds: 'The Department of Health has three years' money from the Treasury, but this has done nothing to make it easier for trusts and health authorities to plan over three years because their allocations are made annually. The report doesn't get into that detail. It would be helpful if it did.'

Policy futures for UK Health: pathfinder.

Key issues for 2015

Public expectation must be managed and sources of funding examined.

The population is ageing and healthcare needs to change to fit this new profile.

New technology offers potential benefits but must be assessed alongside cost.

Scientific advances and new technology may have an impact on where care is offered.

Workforce requirements must be planned and professional training ongoing.