Sunday, January 28, 2007

The cost of free healthcare

British people are proud of their National Health Service, and so they should be.

Having free health care at the point of entry is something envied by people around the world. (Others would need to see it to believe it!)

When you consider that almost 50 million people in the US (equivalent to almost the entire British population) don't have the necessary health insurance required to pay for medical treatment, you realise how lucky people in the UK really are.

Not surprisingly however, the NHS is constantly underfunded.

Of course by definition, if you provide a service for free, the potential demand will be infinite!

Clearly the NHS will always be underfunded.

The question will always remain, by how much and where should any additional funding be coming from?

The answer goes to the very heart of the issue of how the political system currently works.


As a way to move the NHS forwards, the British government has recently imposed a series of 'targets' to help ensure an improving service is being provided to all patients.

The result has been enormous pressure being placed on staff and management to achieve these targets in order to 'stay in business'.

Overall, there have been improvements but even though targets are a good idea, what the NHS really needs now is more money.

The problems of more expensive technology, an ageing population and higher expectations are not going to be solved by setting targets alone. Someone has to pay for this and that someone is...

... You!

But at the moment no political party has the incentive to raise taxes to pay for improved public services. Why?

Because people don't want to pay higher taxes for improved public services.

Consider that statement for a moment...

People... don't want... to pay... higher taxes... for improved public services.

First, ask yourself if you agree with the premise of this argument? Second, are you one of those people?

I believe your answers to each of these questions are most likely to be 'yes' and 'probably not'.


The current state of British (and any other) politics is to essentially offer the choice of either higher or lower taxes.

This puts the voter in a conveniently awkward situation: they can vote for lower taxes, knowing they will be better off, at the expense of others.

What's worse, the decreasing voter turnout in British elections means that 40% of the British popualation (myself included) never get their voices heard.

Is it really fair for 30% of the population to be represented by people offering the false hope of a 'low tax' economy, when this leads to the situation of a increasingly underfunded NHS?

Once the 40% silent minority becomes 51%, it will signal a time for change in British politics. Maybe this could usher in a new generation of politics that stands for what people truly want.


Ben P said...

Hi Wesley,

As you rightly point out the NHS is free at the point of use and therefore the potential demand for its services will be infinite. This is precisely why I don't think that raising taxes to meet this infinite demand is the right solution. If you take your argument to its logical conclusion, every penny that is raised in taxes oculd be spent on the NHS and it would still be underfunded because there would still be further demand for its services.

The current Government has, to some degree, already done as you suggest. They have raised taxes and they have massively increased spending on the NHS since 1997. Of course, much of the money has gone on increased sallaries for the doctors and nurses etc, but some has also gone on building new hospitals, paying for new technologies and the latest life saving drugs.

All these things are excellent I hear you cry - and so they are. However, people are still dissatisfied with the NHS and we are still having to wait for months for operations which are carried out in Europe within a couple of weeks.

So what is the answer? Well as you suggest, we could raise taxes and throw more money at the problem. However, I imagine that as an economist you know better than I do the point at which the tax burden would begin to seriously slow down are economy leading to less money being taken in and less money to spend on the NHS (as well as all the other public services that we treasure)

The other possible option is to fundamentally reform the NHS. Unfortunately, every Health Minister that comes along (about one every couple of years)decides that he/she is going to "fundamentally reform the NHS" This generally leads to a new set of targets and a thoroughly pissed off NHS workforce.

Actually what I think could really work is to do absolutely nothing for a while. Just like any business, the NHS Managers really want certainty about the future. If we leave clinicians and managers to run their hospitals with the same amount of money that they have now (adjusted for inflation), without giving them a whole bunch of new targets to meet, I suspect that over the next few years we would actually see real improvements in all areas of the NHS.

Of course, this does leave the problem of failing hospitals. Well the answer here would take real political courage, but is fairly simple. Allow Strategic Health Authorities (the organisations with responsibility for performance at a regional level) to assess the health demands of their local population and along with the Primary Care Trusts decide whether the hospital should be Closed down so that they can reinvest the money into another hospital which can actually deliver a good service. The reason Governments don't like this is that the SHA and PCT might decide to close a hospital that is in a marginal seat and that could loose them votes.

On the other issue you raised about voter turnout, I think this is far more complex than just the NHS. Voter turnout has been falling in virtually every developed country for the last few decades (except perhaps in Australia where they are required to vote by law).



Wesley Fogel said...


Interesting comments. I guess the idea of the NHS being 'underfunded' is so relative that is lacks any clear solution.

While you are right that a free NHS would in principle require infinite funding, in practise this is clearly not the case.

While you and I sit and exchange comments we don't need any medical care (unless you're really old :)

So, if in practise there are never infinite demands being placed on the NHS, then there should be a practical solution to to the problem of underfunding.

I guess my point about low voter turnout was more related to how we as voters are becoming increasingly frustrated that our voices are not being heard by those who are supposed to represent our interests.

I believe that we, as a society, do care about the well-being of everyone else but that we choose to pass the responsiblity of solving social issues onto someone else who has the incentive to offer us the convenient choice of higher or lower taxes, knowing that the majority (or what's left of it) will always vote for the low tax option.

My point is that politics has to change because the way people in society can express their opinions has fundamentally changed. We no longer need to 'outsource' decisions to a centralised form of government.

Local and national issues, such as the NHS, can be discussed, debated and solved by an inclusive discussion that involves everyone, without the need to wait four years to decided who will make these decisions for us.

Imagine if you were asked tomorrow if you wanted to pay an additional 1p of you income to pay for improvements to the NHS and that Primary Care Trusts would decide how this money is spent.

How would you vote?

Ben P said...


I would be really interested to know what kinds of mechanisms you would have for engaging the general population on a regularly basis when most of them can't even be bothered to turn out for a general election.

I understand what you are saying about the frustration factor (not a bad title for a new ITV no talent contest - what do you think), but sadly I am a bit more synical than you appear to be. I think that people only bother to an express an opinion if they think that the issue will really impact on them directly.

I think that unless you require everybody to express their opinion, the only people who will bother are those individuals who are most passionate about subject.
This could easily lead to a very ugly type of "democracy" where fundamentalists get to dictate the future direction of our country. Furthermore - who would have the job of deciding which questions to pose. Presumambly the Government who you have suggested are unrepresentative and only want to offer false choices based on a high or low tax economy.

Wesley Fogel said...


I believe the reason why voter turnout has been falling is because of voter apathy (since there is little to distinguish between the two major parties in most large developed countries) that in turn contributes towards voter frustration.

If you consider that the system of voting has been around since the 6th century (cf. wikipedia), it makes sense for the form of voting to evolve and suit the times in which we now live.

Over the past decade, more and more people have embrassed the web as a way to access, digest and form an opinion about information in a way they never did before.

Once the internet merges with television, this will grow to include a much larger proportion of the population, opening the way for a truly "interactive" form of (self-)government.

I'm not saying this will be overnight, but it is inevitable that more and more people will demand that their voices be heard, given that there exists the technology to make this possible.

On the issue of who should pose the questions, it shouldn't really matter, as long as the public gets to decide the outcome!

Ben P said...


I agree with you that voter apathy is, to a certain degree, down to the fact that there is very little difference between the two major parties (at least we think there is since we don't really know what Cameron actually stands for yet - other than getting the Conservatives back in to Government).

I also agree that our democracy (the oldest in the world) has to evolve and in many ways it already has. However, I have heard the technology argument before. My problem with it is that nobody has ever demonstrated to me that technology has been used in any other country to liberalise. If anything it has usually been used by Governments to find out more about its citizens (not that we in the UK are citizens -we are subjects of the Queen, but that is an argument for another day).

Anyway, I think that this is probably the last post I will make as I am not sure if I am suited to blogging. I will therefore sign off with a quote by Gore Vidal which I think you will like

"It makes no difference who you vote for - the two parties are really one party representing four percent of the people"