What is wrong with the NHS?: #1. It is the money, stupid

Unlike most other Government Departments, the Department of Health and Social Care faces constant and unavoidable financial pressures.? We are living longer, we have more complex and costly conditions and diseases later in life and we have learned and appreciated the need to provide much earlier and more effective responses to mental health conditions.? Medical technologies allow us to treat diseases and injuries that would have previously been terminal and we have better knowledge and expectations of the potential diagnostic testing and therapies that exist across the globe.

It is inevitable that healthcare will take an increasing % of tax revenues and unless we address that truth, the other public services will continue to decline for the foreseeable future.

It is not helped that the recent coalition and Conservative Governments have not been kind to the NHS budget.?

Whether that was ‘austerity’ or political dogma or a bit of both, my believe is that politicians believed the NHS would just ‘cope’.? It would make-do-and-mend, tighten its belt and continue to do the best it could do.? This premise relied on the belief and expectation that NHS staff would continue to work above and beyond and that small cuts here and there would not be noticed by the electorate.

Then Covid.? Then post-Covid when I think evidence points to a widespread re-evaluation of the informal contract that existed between NHS staff and their employers.? Strikes and ‘work-to-rules’ were inevitable consequences.

I have just heard Sajid Javid arguing that the NHS cannot continue to be funded by taxation and free at the point of use.? He pointed to many economies around the world who have a mixture of public and individual payments for health treatments.? What he didn’t say was that in overall terms, the NHS is the best value for money health system on the planet.?

If you are going to increase the funding into the NHS by additional individual or corporate health premiums, then this will inevitably result in a more expensive health system than if we all accepted more taxation.? Our individual costs for healthcare services would be greater under a co-payment model and those costs would fall disproportionately on those who are least able to afford them.? The other issue of course is that the introduction and operation of a co-payment would inevitably introduce additional overhead costs to the service.

Who are the main beneficiaries of better health?? The obvious answer is us.? Across the world, premiums for private health insurance are increasing and although this is unpopular of course, it is understood by payers because people know they are living longer, they want better treatments and they expect better quality of life in old age etc.? Yet in the UK, we somehow believe we can have all the benefits for no additional increases in tax.? The right wing would say that we are more heavily taxed than ever but in comparison with other economies, we do not have a high tax burden.? The UK tax burden should be high because unlike other countries, we have a fully publicly funded health system.?

Many in the electorate would say they would be prepared to pay more for healthcare, but only if it is ring-fenced – exactly what National Insurance was created to do in 1911 and then extended to pay for the NHS when it began in 1948. ??

Another beneficiary is UK PLC.? Many companies provide private health cover for their senior talent and these enterprises do not regard this a ‘perk’ or incentive to accept the job.? They want their human capital to be as productive as possible and have their dependents cared for so they are not a concern for staff at work.? They know that a healthy workforce makes good business-sense.? In the US, employer-funded health improvement programmes are designed and introduced to improve competitive edge and increase shareholder value.

If people are healthy, if they are not concerned about the health of their loved ones, if they are not needing to provide care or support to them and if they are not languishing in pain or with anxiety on waiting lists then they will more productive at work.? I therefore believe the ‘funding gap’ for the NHS should be partially met through an element of ring-fenced Corporation Tax that reflects the health benefits to the private sector.?

It is no surprise to me that we have tepid economic growth and low levels of productivity in the UK.? I believe in part this is due to ailing and under-funded health care services.? Approximately 1 in 10 people in the UK are on a waiting list.? Then you have people who are supporting people while they wait for treatment.? A good proportion of people waiting for treatment will reduce consumption of goods and services and their mental and physical health will deteriorate. ?There is an obvious case for greater investment in the NHS to improve health and wellbeing of the population – it will increase economic growth and deliver a virtuous multiplier effect on GDP.

Given the erosion of trust in politicians, my belief is that we will need to establish a new National Health Insurance, constructed from a % of Income and Corporation Tax that ring-fences and isolates tax revenues from other Government Departments. ?

Does the NHS spend its money wisely?? Not always, but it is disingenuous to use this as a reason for not properly funding the NHS.? This is a topic I will come back to in subsequent posts but there is a reality that the NHS is under-managed and anything that is under-managed makes poor strategic, tactical and operational decisions.? There is not enough performance oversight.? There is too much unwarranted clinical variation.? Leadership is patchy, sometimes toxic and often distracted by fads – all issues I will return to.? So yes, the NHS should and can be more productive, but that is partly a result of under-funding and a call for greater productivity is not the solution to the affordability of a properly funded NHS.

We do need a better funded NHS. ?I believe we all want and value better health and the obvious conclusion is that we need to ensure those who benefit from better health are also those who will pay for it. ?