New funding for the NHS

NHS Funding

It’s obvious that the NHS will only survive in anything like its present form if new sources of income and ways of reducing demand are found. Lord Warner is only the latest to suggest some sort of flat rate charge on patients.  We have had repeated calls for charges to visit your GP or increased prescription charges.

There is widespread agreement among NHS managers, and most doctors, that we should shift a lot of care for elderly medical cases out of hospital and into the community – and concentrate cases which really need hospital care in fewer bigger centres. These proposals are not always popular with local communities, who are very attached to their local hospitals, however poor they may be.  But even if we could close a lot of hospitals it isn’t clear that this would save money.

Charges at the point of use may be counter-productive.  Obviously even modest changes of £10 a month or £10 a visit would deter poor people from seeking help  with a medical problem early.  4.5 million British adults, have less than £10 a month disposable income. A high proportion of visits to the GP are associated with depression , and a lot of that is generated by financial problems.  But for people who are better off and can easily pay such flat rate charges they may generate a sense of entitlement – making the use of the NHS more like a consumer transaction.

The rising cost of the NHS is largely associated with increases in long term conditions, which relate primarily to unhealthy life styles.  Multinational corporations make a lot of money out of selling profitable unhealthy products, but the cost of the damage is born, as an externality, by the NHS. The NHS is the biggest mutual insurance fund in the world, but there is no reason why it should subsidise the anti-health behaviour of profit making corporations.  A solution to the NHS funding problem which both raised money and reduced the damage caused to NHS patients would be much more sensible than a charge on patients.

We already have a scheme which raises money for the NHS from business in the Road Traffic (NHS Charges) Act 1999. This too is a way of tackling the problem of externalities. Each time there is an accident, a motor insurer is legally obliged to inform the NHS, which will determine if it is liable for any costs.  In 2001 the scheme was raising £100 million a year for the NHS.

Perhaps we could introduce a similar system for “accidents” caused by the consumption of tobacco, alcohol, sugar and so on?  Supermarkets have excellent records of what they have sold, and to whom.  When a patient is admitted whose condition can be attributed to the sale of unhealthy products a charge could be raised against the retailers who sold those products, and they could then reclaim the charge from the manufacturers.  The build up of liability would be a powerful incentive to both retailers and manufacturers to change their behaviour.