Yes, we need a serious discussion about the NHS. But charges are not the answer

Of late, the all-important issue of NHS funding has been brought back into the news by various contributions to this vital debate – some good, some bad. I write today to try call attention to one of the more worrying ones, which is doing the rounds with ever more frequency, and then give the alternatives.

Phillip Lee MP, a GP and a potential chair of Commons Health Committee following respected Tory moderate Stephen Dorrell’s resignation, wrote in The Telegraph on Wednesday about the challenges facing the service. While pledging to “preserve the important principle of access for all”, he suggests this:

“Thirdly, we must change how we pay for healthcare to meet future demand. The NHS is not alone in facing a tough financial climate and other countries offer a range of options to test. Norway charges patients to see their GP and for routine tests. Germany has a compulsory social insurance scheme. France uses a means test. In Denmark patients are charged (at cost) for their drugs once a modest annual budget has been spent; only the terminally ill are excluded. We need to be open-minded.”

In a piece on ConHome following the European elections late last month, Tory backbencher Edward Leigh MP said something similar about charging for health services:

“Health: stop worshiping the NHS. It is the last bastion of centralised socialist planning: you pay in all your life, and have no rights. The French spend only one per cent more of GDP on health, and have a much better system. And, as the French do, means-test incidental costs. Bring in social insurance, charge for those incidental costs and for GP visits. Labour has nightmares of libertarian free-for-alls but, with small contributions from patients, both Sweden and Germany deliver far better results with vastly lower investment from taxpayers’ pounds.”

UKIP, while stressing allegiance to free at the point of use in response to Labour attacks that seemingly struck a bit too close to the bone, have also been open to private finance in healthcare. Deputy leader Paul Nuttall's praise of a report backing charges and private insurance has been noted in some quarters, but less noticed is the following, taken from a health policy page posted on the official UKIP website in 2012 (still available on a local UKIP branch site, even after being scrubbed from the national party’s main page). The document does start off by saying that “The principle of treatment free at the point of delivery is non-negotiable”, and to be fair to UKIP it even pledges to re-introduce free eye and dental checks, but they go on to clearly contradict this sentiment a couple of times:

“Beveridge’s founding principles of the NHS actually recommended a co-insurance model and a UKIP government would undertake a cost-benefit analysis of reverting to this concept. For the purposes of this policy, however, it means a healthcare system open to all British people, regardless of their ability to pay”.

“Experience in Scotland and Wales shows that free prescriptions is a system that is regularly abused. [“County Health Boards”] will therefore be allowed to introduce a small charge (e.g. £1) for everyone if they believe this will assist in controlling these abuses. The decision on free or reduced prescription charges will be made locally.”

Let's break down the opaque, surprisingly un-UKIPish fluent wonk in the first statement. “Co-insurance” was indeed mentioned by Beveridge, but it was vetoed by Bevan and has never really been a part of the NHS as Brits have known it for the past 66 years. It essentially means paying a share of the costs of your treatment at the point of use, usually a fixed percentage, and it forms a routine part of the French health system, where “free at the point of use” is almost an alien concept. The pledge to even analyse “reverting” to it is therefore pretty much incompatible with the “free at the point of use is non-negotiable” and “regardless of their ability to pay” statements. The enthusiasm for prescription fees based on supposed “abuses” in Scotland and Wales, despite no evidence being given in support of this assertion and contrary evidence existing in England (more on this below), is also telling, as is the strained language in this statement about UKIP's attitude to the NHS in general:

“The NHS is highly valued by the British people, despite its problems and limitations. Therefore, unless or until the British people give a strong sign they wish their government to consider an alternative, the NHS will remain under a UKIP government.”

Why are these worrying ideas?  See the graphs below, based on an 11-county survey of sicker adults by the US-based health think-tank Commonwealth Fund:

Source: The Commonwealth Fund, 2013

As the Barker Commission for the King’s Fund highlighted, it is true that “The United Kingdom is unusual in both its low level of charges, and in its low level of total private expenditure on health”. But as we can see above, that is the NHS’s ultimate virtue, not one of its vices. Norway and Sweden are often seen as nirvanas by many on the British left, but this is perhaps the only thing I’ve ever come across where the UK does social democracy better than our Nordic neighbours. Health is mostly fully free at the point of use here, while GP and hospital visits are subject to routine nominal charges there and prescription charges tend to be heavier. As a direct result, even when they continue to best us at equality on other metrics, we beat them on access to healthcare. The same is also true compared to Germany and France. This is the NHS’s crowning glory, and we would be unwise to squander it due to a poor evidence base.

Britons don’t need charges to make them responsible

Greater private financing would mean a greater reliance on mandatory charges and/or individually-purchased supplementary private insurance at the margin, rather than sole reliance on public taxation. This would be partly on the logic that private payment would raise additional revenue for services (more on that later), but another aim is to enforce “individual responsibility” in the use of services. Phillip Lee MP stressed this second point heavily in his piece:

“Designed in the shadow of war to serve a smaller, younger, poorer and more stoic nation, today's system has wildly different demands placed upon it…I remember an 87-year-old man coming to see me dressed in his best suit, sporting military medals. He apologised for “wasting my time” before saying that he had crushing chest pain. I called an ambulance. Shortly afterwards, a 21-year-old woman arrived in her pyjamas, complaining of a sore throat.”

Here I’ll counter vaguely ageist anecdotes with statistics. A Cancer Research UK study in February 2013 found that a quarter of Brits might delay a doctor’s appointment for fear of wasting a doctor’s time. Another cross-national survey on attitudes to cancer in January 2013 found that Britons were actually the most likely of six nations (including several with more charging than the UK) to cite this same reason for not visiting the doctor, leading researchers to conclude that the British “stiff-upper lip” Lee’s brave 87 year-old showed was still going strong and having a potentially negative impact on our national cancer survival rate.

Update (06/09/2014): It's also true that Britons actually visit doctors less often than other Western nations, with the exception of the US - again, facts refute the argument that free at the point of use alone makes us demand too much of the NHS.

Source: Vox article by Sarah Cliffe, Sept 2014

Blunt instruments can’t be made soft

Charges are also a blunt, socially inequitable instrument. They might well have made Lee’s pyjama-clad 21 year-old more discerning about whether she booked an appointment that day, but research also shows the deterrent effect of nominal charges is also strong on those who are genuinely ill - a New England Journal of Medicine study linked charges to complications among patients with higher blood pressure, for example. This is a particular problem, since chronic illness is correlated with either being economically deprived or elderly and fixed-income (“the inverse-care law” - those who need care most will struggle most to afford it when charging exists). Furthermore, the idea of a moral distinction between the “genuinely sick” and the timewasting “worried well” often falls apart in the real world. The public are medical laymen, and thus, they visit the doctor in order to find out whether their symptoms are reflective of anything serious. As much as I disagreed with Lord Warner’s controversial proposals in March for new charges and a flat “NHS membership” fee, he is at least one of few charging advocates to honestly (if slightly flippantly) cede these problems:

“[Charges] raise revenue and they probably choke off some unnecessary demand, so they have a double benefit. They may choke off some need as well. I accept that. But we can’t have it all ways.”

Advocates of charging will often promise “modest” charges, means-tests, exemptions or cost ceilings to try to limit the regressivity of charges, but it has been demonstrated that these measures can only ever lessen the social damage, not eliminate it entirely. In Sweden, charges were initially “modest” and are still subject to a cost ceiling, but they were increased in the 1990s during an austerity drive and inequality of access increased. A second Swedish study found that “patients who reported their financial state as poor were ten times more likely to forgo care than those who reported their financial state as good” under the charging system. In Germany, charges introduced in 2004 with some protections were repealed at the end of 2012. 

Further, a comparison between the Republic of Ireland, where only the poorest and oldest 30% are exempted from longstanding GP charges, and Northern Ireland’s NHS found that 19% of ROI patients (including 26% of those who faced charges) delayed treatment, compared to only 1.8% in the North. The study stated that this pattern was strongest for workers “in the middle of the income range”, who neither qualified for exemptions nor were rich enough to pay, and that “Amongst the paying patients, it is those that are poorest and those in the worst health who are most affected by the consultation charge”. Ireland’s conservative-led coalition government is now trying to phase in free care for all to remedy this, despite recent economic turmoil and health cuts. 

And even in England for prescription fees, although our broad exemptions exempt effectively two-thirds from the current £8.05 per-item charge and 89% of prescriptions are dispensed free of charge, the Royal Pharmaceutical Society still warned that 750,000 people a year and two-thirds with long-term conditions (LTCs) report problems affording medications, meaning “charges deter essential use of medicines in people with LTCs”.

They’re a false economy

Which leads us to another point – charges can be a false economy, potentially blunting the revenue-raising rationale for them that Warner, Lee and others cite. English prescription fees are tolerated with gritted teeth even by Labour politicians because they’re in theory worth about £500 million a year to the NHS. However, in health economics, prevention is not only better than cure medically, but also potentially fiscally. Studies in the US and Canada show that prescription charges can result in people, particularly the oldest and poorest, failing to take even essential medications, resulting in inadequate management of their conditions and more costly Emergency Department (A&E) visits. This is known as the “rebound affect”, and it creates hidden costs for the health system. When visit charges were imposed in Saskatchewan province in Canada, healthcare utilisation among low-income families fell, but it rose among higher-income earners, and no overall fiscal gain was made – these findings led the Canadian federal government to restrict charging in 1984. In Germany, although advocates claimed that the 2004 GP fee was raising several billion Euros, it was repealed in part because German GPs objected to the cost of having to administer the charge. We should also bear in mind that bringing in the exemptions or means-tests necessary to make charges less socially regressive would only make administering a charging system more complex.

What to do instead

Nevertheless, the NHS does face extreme challenges in the form of a £30 billion funding gap, and a continuation of the status quo will only lead to more rationing and falling quality, equity and public trust. So even when faced with dangerous proposals to “save it” that would involve shredding its defining principles, no one can afford to merely be a naysayer. Instead, defenders of the NHS must be armed and ready with constructive solutions, so here’s a few:

Integration. This commands broad support among the three parties, though ideas differ about how exactly to implement it and NHS competition rules as currently written may be thwarting it in some places. At the least, service integration should make the health system more logical, efficient and seamless from a user perspective, breaking down barriers in care, moving patients into community settings and ending the bias in favour of hospital care. But there is a hope, vindicated by some but not all evidence, that it may bring down costs too.

Competition: Separate from the new and worrying debate about the possibility of more private financing in the NHS, there’s been a longer and more intense debate about private provision – whether private firms or third sector organisations should be allowed to play a greater role in providing free and publicly-funded NHS services within an internal NHS market, rather than this task being the exclusive preserve of public NHS trusts. Here, I am with Alan Milburn, who argued that while charging would take us down an “ideological blind alley”, it would be fine for the NHS to be "no longer a monopoly provider of care” so long as it is still a “monopoly funder of care”. Subject to due regulation, private sector involvement can help bring innovation that might drive quality improvements while bringing cost-efficiencies, in turn helping us to keep the NHS strong and public on the funding side. But for this to work, the left and the right alike need to be clear on the firm distinction between provision and funding.

A core benefits package stating what is provided free on the NHS. I’ll start by saying that we should be clear here that compared to other options, this qualifies less as a clear “alternative” to private finance or a means of upholding equity. Many European countries already have (relatively extensive) core entitlement lists on the logic that public healthcare should be a social insurance contract – you should know exactly what your taxes/contributions entitle you to, rather than finding out on an ad hoc basis. However, a specific list by nature excludes anything not included and those treatments would fall quickly into the private sector, effectively making parts of healthcare somewhat more “two-tier” and reliant on private financing by default. Less “essential” or “effective” services, already heavily restricted in the NHS but still important for some people in genuine need, would become unaffordable to some, in order to keep the NHS core services package free from fresh charges. This is not an ideal option and there’s clearly a good reason why the NHS has avoided it, but it would make NHS coverage consistent, and therefore equal in a sense. It’s also worth remembering that in some European countries, patients already face nominal charges on the main state-funded package on top of full-price private payment for any treatments outside of it - keeping a core package free in a time of tightening budgets might still be an achievement if things get tough in the coming decades.

“Did Not Attend” (DNA) fines. There is currently no real penalty in the NHS if you’re among the one in ten who fails to turn up to a GP or doctor’s appointment, and since this can cost the NHS £100 a pop, some think there should be. It’s easier to understand the outrage aimed at specific individuals who have already proven themselves irresponsible, compared to the pre-emptive contempt advocates of charges on all appointments/prescriptions seem to harbour for the public at large. So yes, in exchange for Britain’s policy of not charging every single patient upfront for every visit (as they do in some other nations), perhaps we could consider instead fining those who abuse the privilege by failing to turn up. Labour MP Stephen Byers once suggested it in a speech to the SMF and many GPs favour it. But even here, the same basic problems that come with the idea of generalised charges still apply. Admin costs might wipe out any potential fiscal gain. More worryingly, while some are just too lazy or disorganised to turn up for their missed appointments, we also know that dementia, psychiatric disorders, homelessness and low socio-economic status are also predictors of non-attendance, so the “blunt instrument” issue also remains. The NHS is also already using campaigns and technology such as reminder texts to reduce non-attendance. If we had to impose a new charge, a DNA fine is the one I’d pick, but again it’s not ideal.

Raise National Insurance and link it to the NHS. In 2002, Gordon Brown secured public support for an NI rise by linking it to the need to boost NHS funding, calculating that hypothecation and support for the NHS would sugar the pill. Andy Burnham is now considering the same thing, and is consulting with Frank Field, who wants to go even further. Field proposed to resurrect contributory social insurance by making NI the main funding source for a ringfenced NHS and social care mutual with a publicly-elected board (general taxation financing would become as a secondary source of funding, to cover shortfalls and those not in work – minus the direct charges, this is basically how healthcare is paid for in France and Germany). However, either version has its pitfalls. Some in Labour would rather cut NI and are unsure that a rise will go down as well given the tougher economic climate now compared to 2002 – opinion polling has been mixed on this front. There are some concerns that an NI rise would not raise enough money. Further, there’s also a point to be made that it’s our ageing population that’s putting the greatest strain on the NHS, including some pensioners who are relatively wealthy, while an NI increase would mean that younger, working and potentially lower-income payers will be on the hook to pay for all the new revenue.

As a result, an inheritance tax rise to fund long-term social care reform more directly from older users has been backed by Andy Burnham, though this proved controversial during the 2010 general election. To be fair to Lord Warner for a moment, while the ideas for flat-rate “NHS membership” and several direct charges in his March paper for Reform drew a lot of fire from the left, less noticed was that he also endorsed inheritance taxes. Further, he also backed another bugbear of the libertarian right, increased taxes on cigarettes, unhealthy food and alcohol. There are issues with these sorts of “sin taxes” and especially those on foods, as they can be economically regressive for example, but they would reimburse the NHS for the pressure created and to me they’re a preferable alternative to charging from a prioritisation point of view.

A new “NHS tax”. This would be similar to the NI idea, but the hypothecation link would be clearer and politicians would have a freer hand to set the terms, meaning that it would be easier to ensure that the tax raises the desired amount and is progressive. Warner’s £10 NHS membership idea was technically a specific variation on this theme, to be collected by councils and hypothecated for local public health (budgets for this are currently being raided by cash-strapped councils). But its undoing as an idea was that he proposed it as a flat-rate charge that would be bundled with council tax, rather than accounting for income or wealth. In terms of a dedicated, broad-scale NHS tax, both centre-left IPPR’s Nick Pearce and Danny Finkelstein of the centre-right Policy Exchange have mooted this idea recently.

Conclusions

So there you go. There’s a range of options to make savings and raise new revenues in order to confront the huge and unprecedented challenge the NHS faces. None of them are easy options and many have their pitfalls, but if we still value what the NHS stands for, every one of them is qualitatively less damaging than generalised point of use charging on appointments and hospital stays would be for Britain. I hope all politicians take heed of this.