Could private top-up insurance help fund the NHS?

NHS Funding

It is hardly controversial to suggest that standards of healthcare in the NHS are declining. A stream of recent reports has shown the strain the NHS is under, drawing attention to a near universal failure to meet the target of four hours’ waiting time in emergency departments,1 the longest waiting times for operations since 2007, and unprecedented staff shortages.

The principal cause of this lamentable state of affairs is unquestionably underfinancing of the system. In 2012-13, few trusts were in deficit but by 2015-16 the proportion had reached 85%.2 As the King’s Fund has said, we are “facing a health system buckling under the strain of huge financial pressures.”2

Current problems are set to intensify at an alarming rate. The budget for NHS England is planned to rise by 1.4% next year, then by 0.4% and 0.7% in the following two years, compared with an expected rise in demand and cost pressures of between 4% and 5% a year.3

Muddling through

If we try to go on “muddling through,” a steady erosion of standards is inescapable. Trusts under ferocious pressure to balance the books leave vacancies unfilled, cut the ratio of staff to patients, slash capital spending, defer operations, increase waiting times, cut training, and restrict the treatments they are prepared to offer.

The only hope of reversing this process is properly to debate how to bring more money into the NHS. The NHS will not be adequately financed as long as it relies exclusively on tax revenues. Given budgetary constraints, it is inconceivable that the government will approve NHS budgets rising more rapidly than gross domestic product to match rising demand.

The choice is stark: either we find new sources of finance to supplement tax revenues or we accept the prospect of declining standards for years ahead.

French model

Lessons can be learnt from some other European countries that provide excellent healthcare and are financed differently from our system. If we moved towards the French model, for example, mainstream healthcare could continue to be mainly financed from public funds, but the proportion of treatment costs covered would vary depending on the service provided.4 Treatment for catastrophic events would be paid for entirely by the state, with more minor treatments requiring a contribution from individuals. People on benefits would be exempt from such charges so that everyone could receive the care they needed.

The government could negotiate with insurance companies the premiums chargeable to provide cover for this menu of charges, as in Switzerland and the Netherlands, and also for the treatments which the NHS is likely to withdraw from as the financial squeeze continues. Without such a scheme, poorer people may lose access to these treatments.

Far lower premiums

A French style scheme would make top-up insurance readily affordable for most people. The premiums would be far lower than for private insurance at present because the bulk of costs would remain covered by the state.

The French experience is that people opt for top-up insurance in large numbers—95.5% of people have it and the rest have their healthcare paid for from social funds5—so it is not easy to describe this as a two tier service. Over time, it is possible to envisage that a quarter of healthcare in the UK would be paid for from these supplementary funds, as it is in France, enabling us once again to deliver international standards.

People on low incomes would be treated for free, with better-off people making contributions well within their means. We’re rich enough to drop the “free at the point of use” principle for the pragmatic “no one should be denied the healthcare they need for financial reasons.” How else can we reverse the decline in standards that now looks inevitable?

This article first appeared in the British Medical Journal