The NHS model is on its last legs — time to replace it

Times

2 days ago

At last, the unthinkable is being seriously thought about healthcare in Britain. The NHS is bust. More and more billions are periodically thrown at it, but its waiting lists are horrendous and relative to other comparable countries it does poorly in life expectancy and healthy life chances. Only the US does worse.
As the largest employer in Europe, the NHS has some 1.38 million full-time equivalent staff who absorb almost half the budget for day-to-day spending. It's virtually impossible to run efficiently, and examples abound of rotten management and excessive bureaucracy. So says a report by Policy Exchange, which declares that this has to end.
From 1955 to 2023, real health expenditure per capita rose by about 850 per cent. At 9 per cent of GDP, government health spending is almost the highest of all developed countries and by some estimates will rise to more than 20 per cent of GDP by 2070.
Without radical reform, says the report, other public spending would have to be squeezed or taxation would need to be increased to eye-watering levels. This would damage the economy so badly that 'it simply cannot be allowed to happen'.
In his foreword, the former health secretary Sir Sajid Javid says Britain is now at a crossroads. The NHS model can't cope with spiralling demand. It's run entirely by the state and its agencies. By contrast, says Javid, the very best performing healthcare systems combine high levels of state subsidy, mandatory insurance, co-payments, and individual choice.
The report accordingly proposes replacing the tax-funded NHS by compulsory insurance, backed up by a publicly funded safety net to cover the poor, plus some element of co-payment to incentivise people to look after themselves.
It recommends the model adopted by the Netherlands in 2006 under which people choose their insurance providers, with the state's role reduced to regulating insurers and providing the safety net for those who can't afford to insure themselves. Dutch healthcare costs are now proportionately lower than in the UK, waiting lists are smaller and health outcomes generally better.
It has been clear for years that European-style social insurance systems fulfil the moral obligations of the NHS while providing better outcomes. Yet the NHS has been treated by Conservatives and Labour alike as the most sacred of political cows. This is even though it's not just failing to deliver adequate healthcare but the enormous sums it's swallowing are seriously distorting the economy, diverting essential investment from services ranging from education to defence.
However, the whole public sector is on its knees for which the NHS is not the principal cause. The criminal justice system, for example, is collapsing through sustained and serious underfunding. The retired senior judge Sir Brian Leveson has now controversially proposed to limit trial by jury to tackle the immense backlog of cases, some of which take years to come to trial and may have to be abandoned because of the passage of time. Limiting jury trial, however, won't solve the problem because the lower courts are also under immense strain, as are the prisons and the police.
The essence of the problem is that for decades Britain has been living a lie. It has indulged itself in a welfare state without taking the measures to pay for it. This goes back to the end of the Second World War, when the Attlee government decided that the spirit of the times demanded the building of a brave new world based on collective provision and equality. Far less attention was paid to creating the wealth to pay for this nirvana. It was assumed that redistributing wealth from rich to poor would pay for it all.
Society thus moved from making to taking, producing less and less while telling itself that it had a right to welfare provision and that the rich should stump up. No government (other than Margaret Thatcher's) was brave enough to deliver some essential home truths about spending above the country's means.
Instead, governments lied that things were getting better and that more was being spent. In fact, the public sector was being salami-sliced to shuffle funds from one service to another; and all were being fleeced to pour more billions into the black hole of the NHS.
The ultimate symbol of this irresponsibility, and a principal force behind Britain's slide from making to taking, has been the benefits system. According to the Centre for Social Justice, people claiming universal credit and payments for ill health will soon earn £2,500 more than through the minimum wage. The Office for National Statistics says nearly one in four working-age people are classified as disabled.
The NHS Confederation says that in 2021-22, 63,392 people went straight from university on to long-term sickness benefits, with an incredible increase among 25 to 34-year-olds of 69 per cent in five years. Last week, Kemi Badenoch rightly said the UK was 'sitting on a ticking time bomb' of spiralling welfare dependency, spending more on sickness benefits than on defence.
The NHS model must be replaced to provide the equitable and efficient provision of healthcare to which politicians pay such dishonest lip service, and to protect the economy from such damaging distortions. But the underlying issue of an unaffordable welfare state can only be tackled by a government brave enough to recreate the work ethic, and an economy that delivers the jobs to inspire it.