What’s Good about the NHS

NHS Consultants Association, no date, but probably 1980


‘The seeds exist, and may have already germinated, for expansion of private medical care through the forms of supplementary insurance provided by the Provident Associations which may secure the advantages of increased resources for health care and open more scope for patient choice.’

This was the conclusion of Lee Donaldson Associates from their survey of UK private medical care to the end of 1979. After a lull in the mid-1970s, there has been a substantial increase in those subscribing through group (company) membership to private insurance schemes. Private medical insurance is a fashionable ‘perk’ offered by companies to white-collar employees. The growth of group membership should be contrasted with the plateau in individual subscribers.

The NHS is struggling in a hostile environment. The recent severe cutbacks in public expenditure, coming after years of financial ‘retrenchment’, are causing damage which could become irreversible. The answer to the plight of the NHS does not lie in increasing dependence on the private medical industry.

We all know — and the media remind us daily — that our health service has many faults. But the NHS has some unique and positive features which distinguish it from other systems of delivering health care and which are too often taken for granted.

The purpose of this pamphlet is to describe what is good about the NHS. It attempts to depict the losses that would result from replacing the NHS with a health care system financed by what is misleadingly termed ‘health’ insurance. (‘Acute illness insurance’ would be more accurate).

This pamphlet attempts to compare the experience gained from more than thirty years of state-administered health and illness care in this country with the views of commentators on different types of organisation of health services in Western Europe and North America. It will examine, though very briefly, a welter of complex issues surrounding the financing and organisation of treatment and care services.

By way of background, it should be pointed out that there are almost as many different systems of financing health services as there are countries. The NHS is mainly funded from taxation; other countries have state-administered national insurance schemes, which have some similarities to the NHS. Certain countries have different combinations of state provision and private insurance, the state either running insurance schemes or providing free services for the ‘uninsurables’ — the bad risks — or those who cannot afford the premiums. The USA is an example of a country where much medical and nursing care is financed by commercial insurance, though in recent years the old and the poor often have their treatment financed from public funds.


  1. Lower overall costs

International comparisons are notoriously difficult, but it would seem that the NHS is less costly than other systems of health care provision. Evidence for this judgement comes from a report published by the Organisation for Economic Co-operation and Develop­ment (OECD) in 1977 from which the table below is derived:-

Expenditure on health as a percentage of Gross Domestic Product (mid-seventies)

Private          Public        Total

%                     %                %

  • Britain                  0.6               4.6             5.2
  • Germany             1.5               5.2              6.7
  • France                 1.6               5.3              6.9
  • Sweden               0.6               6.7              7.3
  • United States       4.3               3.0             7.4*

*Discrepancy due to rounding

By 1979, America was spending about 9% of her Gross National Product on health care as compared with under 6% in the UK. A national health service permits closer control of expenditure. On an anecdotal note, a US Congressman visiting Belgium to learn about their insurance system was told by the Secretary-General of the Belgian Ministry of Public Health: ‘Don’t do it our way: you could never afford it’.

While the reasons for the lower costs of the NHS are fairly obvious, the inadequacy of available data makes it impossible to rank them in order of importance. In general, the lower expenditure of the NHS is accounted for by the less excessive use of high-cost technological services compared with some other countries: more general practice and less use of hospital facilities, less unnecessary ‘discretionary’ surgery and so on. These factors are explored in more depth in the next section. ‘The qualitative arguments’. The lower cost of the NHS is also partly explained by differences in the earnings of doctors — it is not uncommon for doctors to earn £100,000 p.a. in America or Australia — and possibly by differences in the incomes of some other health service workers. Finally, the NHS has lower bureaucratic overheads (see below).

Within the UK, comparisons with other types of public expenditure are also interesting. In the year 1978-9, expenditure on the health and personal social services (£8,980m.) was only slightly greater than that on education (£8,702m.) and less than that on defence and overseas services (£9,251m.) The increase in military expenditure and the cuts in social welfare services have prompted The Lancet to comment that the conflict between the two is now self-evident. Frank Barnaby of the Stockholm International Peace Research Institute has written in the same journal that there is no sense in ‘Britain increasing its military spending by 3% per year in real terms, as it plans to do, when it is in such dire economic straits that the social services have to be savagely cut. Such absurdity is hard to understand.’

  1. Lower administrative costs

‘The cheapest way of raising money yet invented is through taxation…In contrast, private insurance imposes extra administrative costs.’ Contrary to myths perpetuated by the media, particularly since the 1974 reorganisation of the NHS in Britain, administrative costs have amounted to about 6% of total health expenditure, while the proportions in Belgium and France are 12%,18% in Australia, and a Canadian Minister of Health has calculated that administrative costs in the USA are no less than 21%!

The comparatively low bureaucratic overheads of the NHS are not, on reflection, surprising. The selling of complex insurance packages and the examination and payment of doctors’ bills according to a fee-schedule are expensive. Germany, for example, has 1,600 individual health insurance funds which require 80,000 staff to operate them.


  1. Coverage of the population

The aim of the NHS is to make available a whole range of treatment and care services to the entire population, wherever they live and without financial barriers. One of the founding fathers, Aneurin Bevan, wrote that ‘The collective principle…claims that financial anxiety in time of sickness is a serious hindrance to recovery, apart from its unnecessary cruelty. It insists that no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means.’ Taking most of the personal money and accessibility problems out of sickness is no small achievement. Over twenty years after Bevan, David Stark Murray reiterated the point: ‘Medically, socially and personally the vital aspect of the NHS is that in it medicine has been taken out of the market-place, has no financial barriers.’

On the other hand, private medicine in its most extreme manifestations, such as in the USA, can carry a heavy ‘human cost’, The Secretary of State is fully aware of this: an article in New Society in 1979 quoted Mr Jenkin as warning the US Pharmaceutical Association in 1977: ‘Ten million Americans lack any private or public insurance to pay for health care and many more have inade­quate cover. In 1970, ill-health accounted for a third of all personal bankruptcies. Market forces are pretty ineffective in balancing the need for health care and the supply of services.’ There is plenty of evidence to support the Secretary of State’s opinion. Those covered by insurance are usually those whose needs are greatest: for commercial reasons, health insurers predictably place stringent limitations on the claims they will meet — remember, for example, all the insurance forms headed ‘I am under 65…’ The state has been forced to come to the rescue.

But public services designed to ameliorate the harshest effects of competitive medicine in a system dominated by commercial considerations are inevitably second-rate. Public programmes can only be piecemeal tinkering in a system whose deficiencies require Structural change. This is well illustrated by the development of Medicare and Medicaid plans in America. Medicare was a belated attempt to help the elderly, Medicaid to help the poor of any age.

In order that Medicaid is not used by people who could afford to pay, the stigmatizing and expensive process of means-testing by armies of nurses and social welfare officers has to be applied. Furthermore, a high proportion of physicians refuse to participate in the Medicaid programme because of the lower rates of reimbursement, thus preventing many of the poor from obtaining reasonable access to medical care.

Medicare has led to what is known as the ‘Medigap’ problem. A document published by the Inter-Governmental Health Policy Project at the George Washington University has discussed the many important ‘gaps’ in covering the needs of the elderly, the greatest of which are in home and long-term support: ‘Medicare is geared more toward episodic, short-term, acute illness rather than the chronic, long-term disorders prevalent in the elderly population. Therefore, many of the greatest needs of the elderly, such as custodial care, dental care, and eye care, are not covered at all.’

  1. Ease of Access to services

Despite their much publicised (and real) bureaucracy and red tape, health services in the UK are relatively easy to obtain. This simplicity can be contrasted with the extraordinary complexity of most pluralistic systems where public and private co-exist and, more importantly, where medical insurance companies are competing with one another.

An Australian consumer expert, Erica Bates, writing in The Lancet, has described the Australian experience in health insurance: ‘Variations occur between funds in the number of … .services they allow per year, the number of ‘higher cost’ hospital weeks they pay for, and in which type of hospital, and the proportion of the service costs which they reimburse. It would take an actuary to work it all out. The average person is totally helpless among all this confusion, and opting out is one way of throwing up one’s hands in despair. . .The Australian, by no means a radical newspaper, described the whole scene as one of confusion, inequity and waste’ and, in my experience, that is an accurate description.’

  1. The emphasis on primary care

The foundation of the NHS on general practitioner services is in marked contrast with countries where the patient has direct access to specialists. The typical British GP in fact only refers about one-tenth of his patients to the hospital system in any one year. This means that inappropriate and excessive use of expensive, high-technology, hospital-based resources is minimised. Another benefit is that the patient does not have to ‘shop around’ from one specialist to another. If a second opinion is needed, it can be arranged and in­terpreted.

Not all countries with private health insurance systems bypass primary care: in Belgium, for example, 50% of doctors are GPs and there is a rich development of home nursing services. However, in general, private medicine encourages a concentration on specialis­ation to the neglect of general practice. This is certainly the case in France, Germany and the USA. In West Germany there were only 14,000 general practitioners left in 1976, as compared with 26,000 in Great Britain (Germany has a larger population and many more doctors overall).

  1. Range of services provided

The NHS is unusual in the wide range of services it offers. We too often take for granted the existence of antenatal clinics, geriatric and terminal care, well-developed pathology services, accident and emergency services (including ambulances), home visits and so on. Elsewhere, some of these services are not so available and not of such a high quality; some may not even be available at all. Furthermore, the NHS is part of a social support network that includes Social Security and Social Services.

The NHS would appear to be outstanding in the level of its provision of services in the patient’s home or within the local community. The work of Health Visitors, District Nurses and closely related social services such as Home Helps is particularly important in antenatal and child care and the care of the elderly. Despite the increasing shortage of money and problems of co­ordination, the quality and level of provision of community health and social services, to the benefit of many people, are much better in the UK than many other countries. The concept of ‘social care’ already has some meaning – and could have a great deal more.

  1. Services for the chronically ill and disabled

As a national, state-funded system of health care, the NHS makes it possible to set priorities for the provision of services to those in most need — and those least able to pay for such services – the elderly, the mentally ill and the mentally handicapped, for example. Though we are all aware of the problems of shifting resources to these ‘neglected sectors’ of care, at least with a national organisation it is possible to try.

An Anglo-American study which compared the services provided for the elderly in Great Britain and the United States, commented that ‘The speciality of geriatrics has developed steadily within Britain since the establishment of the NHS. It is a support service for the general practitioner that is a model of health care, centred on the patient and the overall population rather than on an organ and its diseases’. By contrast, geriatrics barely exists in the United States. The American record on providing good, generally available facilities for convalescence is poor. Private nursing homes are something of a national scandal. These shortcomings are a consequence of a concentration on the popular and glamorous specialities such as surgery, seemingly inevitable in countries depending on private medical care, to the neglect of such enormous needs as geriatrics and psychiatry. The level and quality of provision of caring services for the long-term chronically ill and disabled is an important test of any contemporary health care system. The need will increase. In the 1970s, those aged 65 and over used something like half the home nursing services and half the in-patient beds in the NHS. Suzanne Mollo, in a paper on private medicine in the UK, suggests that ‘The prolongation of human life in this century has produced, in all developed countries, a problem which was unforeseen and is still not fully appreciated’. The proportion of the elderly in the population is still growing.

  1. Appropriate and relevant services

The wildest excesses of high-technology, salvaging medicine exhibited in some countries have been avoided in the NHS. It is not widely realised that, in a health insurance system, doctors largely generate the demand for their own services. An important consequence of commercial medicine is an increased use of high-cost technology, of services which are too often inappropriate, irrelevant and unnecessary.

The studies of an American anaesthetist, Bunker, among others, have shown that the USA has twice as many operations per person as England and Wales at all age levels. The difference is mainly accounted for by ‘discretionary’ operations: if it pays well to circumcise, remove gall bladders, uteruses and so on, ‘whip it out’ is the maxim. Another American, Professor Torrens, in an important paper on the implications for the UK of commercial insurance in the United States, has written that ‘The simpler, non-technical elements, such as preventative medicine and family practice, have been pushed to the side in the rush towards exciting new procedures and techniques’. This phenomenon is not confined to the USA. In West Germany, for example, the number of hospital beds has grown far too high in relation to real needs — the phrase ‘a bed mountain’ is often heard. The evidence suggests that hospital staff in a private insurance system have little incentive to use resources efficiently and economically.

There seem to be three main reasons for this over-use of expensive technology under commercial systems. The first, and probably most important, is the method of payment to doctors by insurance companies, fee-for-service rather than — as in the NHS — capitation payments, salaries and systems that reward judgement. Being paid a fee for each procedure carried out provides a strong incentive for doctors to maximise the number of interventions for which payment can be claimed. In Professor Abel-Smith’s words, ‘The highest financial rewards go not to the best doctor but to the quickest and to the doctor with the least professional scruples about responding to the financial incentives of the payment system. Some doctors may even claim for services which are not performed’. Over-concentration on technological medicine is also the result of competition amongst doctors and hospitals. In the USA, because hospitals compete with each other commercially, they often acquire very expensive equipment and other facilities which they must then try to use whether there is real need for them in that area or not. In 1975, for instance, over 40% of hospitals with fewer than 100 beds had intensive care units.

A third reason for unnecessary use of services is fear of prosecution for negligence: in the USA, about 10,000 malpractice claims are filed each year. Doctors typically feel they have to order costly investigations and tests not because they are really needed but to cover against malpractice suits. A doctor with the law courts at the back of his mind may not always use expensive resources wisely.

  1. Reasonable distribution of services

The debate surrounding the report of the Resource Allocation Working Party (RAWP) drew attention to the many geographical (and therefore social) inequalities in the distribution of hospitals and doctors in the UK. No one would pretend that the NHS is perfect in this respect, but once again it is not commonly realised that services provided through the commercial market typically lead to even greater problems of maldistribution. In both France and Germany, for example, doctors concentrated in the affluent areas of cities to the neglect of rural areas. Some French observers speak of veritable ‘rural medical deserts’.

Under a private system, doctors avoid remote and sparsely-populated areas because the available ‘market’ is not large enough. Doctors also avoid decaying inner city areas, not least because they contain a high proportion of the old and poor who both make high demands on their services and are not well insured. These areas are left to the under-financed and over-worked public services. The second-rate becomes over-loaded and would always become third-rate but for some dedicated — and exploited — individuals.

  1. ‘Devotion to people as people’

We forget at our peril that doctors in the NHS act as professionals rather than businessmen. Professor Torrens has described for America the ‘gradual growth of mentality among hospitals and doctors that health care is a business more than a humanitarian effort’.

The conclusion of Torrens’ paper is so important that it merits quotation in full:

‘If the creation of a private health insurance plan shifts the emphasis from comprehensive family care towards an item-by-item, high-technology, entrepreneurially oriented health-care, system, it will…not be worth the price to the country. The present system is remarkable in its devotion to people as people, not as interesting scientific problems to be tackled organ by organ; it is remarkable among health-care systems of the world in its devotion to family practice and to the values inherent in that devotion. Anything that would move the value system away from that more humane, more personal approach would remove much of what is best in the British system today.’


  1. Clinical freedom

This and the following section will look very briefly at two ideological issues which are too important to ignore, although there is not space to examine them thoroughly here. First, it is often held that a state system of health care restricts the clinical freedom of doctors. Two points seem relevant: one, that absolute clinical freedom exists nowhere. As medicine becomes more technically advanced and expensive, the limitations on its practice are likely to increase. Indeed, it can be argued that under a fee-for-service system, the medical profession’s concern about litigation for malpractice results in a greater limitation of clinical freedom than in the UK. Furthermore, under the NHS the type of care offered is not limited by the patient’s ability to pay or the type of insurance contract. Second, completely unfettered clinical freedom is not necessarily in the best interests of doctors, of the health service or of the community. The autonomy of the medical profession should be qualified by the need to use limited resources wisely — and resources are limited everywhere, whether explicitly or implicitly. It is worth noting that schemes of medical audit have shown that major savings can be made and the standards of medical care improved by arrangements that partially restrict the clinical freedom of doctors.

  1. Consumer sovereignty

The starting point of the classical market economy ideology of medical care is ‘consumer sovereignty’ — which, it is claimed, is also thwarted by the NHS. Fundamental to the free market approach is that the patient is capable of shopping around, of choosing between different services, and that within a state-administered system the patient cannot express his preferences.

Whilst certainly not suggesting that the potential patient is incompetent, it must be said that the notion of unlimited consumer choice in medical care is a myth. The consumer does not know enough. Is that back-ache due to a strain, a disease of the spine, bad posture or a gynaecological condition? In a free market system the patient must risk making a wrong decision which could literally be lethal, or else move from specialist to specialist, undergoing multiple tests at great cost until he or she has acquired enough information on which to make a decision. In Professor Abel-Smith’s words, ‘There are few fields of consumer expenditure where the consumer is as ill-equipped to exercise his theoretical sovereignty as in health services’.


In summary, private medical care is no model on which to build for what Disraeli — and Mrs Thatcher — called ‘one nation’. Rather we should build on the solid foundation of the NHS. We should not assume that the NHS was good, is good and will forever be good, but cherish the best and desirable features, identify the weaknesses and improve what many still regard as the envy of the world.

We need much more help from the media. Public services in general, and the NHS in particular, still tend to get a very unbalanced press. NHS workers — and the general public — need to end their ‘passivity’. How often is an effort made to object and to tell the media of the good points of the NHS? Everyone has a responsibility to communicate constructively about how the NHS could and should be improved.

However, the controllers of the media — proprietors and editors — carry primary responsibility. If the media claim to be interested in informed public debate, they too have much to do. If the NHS and its staff are so often and so unfairly criticised, it should be no surprise when they become defensive and even hostile to members of the press. One wonders whether the controllers of the media ever stop to think about what they do to morale. Building Societies, banks or estate agents, for example, would protest loud and long if they had to put up with a fraction of the ill-informed and carping criticism that the NHS has to endure.

Finally, to improve the NHS, all who believe in it must come off the defensive. The NHS is mainly funded from general taxation and is, therefore, greatly affected by major decisions in the national economy. At the same time, it is the NHS which has to deal with the illness and accidents associated with the way our society is organised. Thus it is proper and indeed essential for NHS staff and others to constructively attack waste and damage wherever it occurs. There are many starting points — accidents at work and on the roads, unemployment, or the £80m — £100m p.a. spent on tobacco advertising and promotion.