A third way for healthcare

Fred McElwee

February 10, 2020

In most facets of life, Britons love choice. There are thousands of pubs in London alone, and patrons have a choice of dozens of drinks within each. Cafes have countless coffees and teas on offer. Londoners even have their choice of six airports. As far as I can tell, there is only one exception to this rule: healthcare.

Only in this domain does the British public seem largely satisfied with having access to just two options. The first is the private healthcare sector, which is so expensive that it is out of reach for the vast majority. The second option is, of course, the NHS.

While this service does achieve universal coverage, it provides some of the worst cancer care in the developed world, with waiting lists stretching over a year and a system so strained that it seems to fall into crisis as soon as winter arrives each year.

In a world with limited resources, a system that provides rivalrous services for free inevitably has to ration in some other way. The NHS achieves this via waiting lists and significantly limiting access to less cost-effective services, many of which are covered in other countries.

You’d think there would be a middle ground between the expensive private system and the free-at-the-point-of-use NHS system where people could voluntarily choose to pay a small amount for slightly faster, higher quality care.

This opt-in system could work as follows. If a patient wants to access a more expensive and effective treatment which is not covered by the NHS, or to access a specialist or procedure more quickly via a private provider, the NHS would contribute the marginal cost of the care it would otherwise provide, and the patient would cover any difference in cost.

A less ambitious plan would have the NHS subsidise only a share – say, 75 per cent – of whatever the marginal cost would be to provide the care under the status quo, in which case the NHS would actually save money.

And in the rare case that the private provider offered to provide the service or treatment cheaper than the NHS, the patient, provider and NHS could split the savings.

This isn’t as outlandish as it may initially seem. A friend of mine was recently on an NHS Scotland waiting list to see a specialist for 15 months. As a student, she could not afford to seek care from the private system, as it could have cost thousands of pounds. However, in order to avoid the queue, she would have been able and willing to pay a couple of hundred pounds to cover the difference between the cost to the NHS of the care she eventually received and the cost of the more expensive private provider.

Alternatively, suppose that a cancer patient wanted access to a new chemotherapy drug which cost £15,000 rather than the (less effective) therapy covered by the NHS which cost £10,000.

It is not unreasonable to give patients the choice of paying the £5,000 difference to receive the new treatment, and it would be much better than forcing them to either receive the less effective treatment or bear the entire £15,000 cost of the better treatment in the private sector.

This approach would not entail cutting the government’s funding of the NHS. On the contrary, it would effectively increase resources devoted towards healthcare provision in Britain by allowing patients to voluntarily finance improved care, while the NHS would pay less than it would have cost to treat those patients anyway.

There may well be a strong case for the government to spend more on healthcare too. But that isn’t necessarily the same thing as spending more on services provided by the NHS internally. Spending additional funds in a way that maximises patient choice and health outcomes should be everyone’s aim. And what better way is there to increase expenditure than leveraging additional government spending to get patients to voluntarily spend more on it too – without additional taxes or crowding out other vital government services?

Some people may buy additional insurance for extra cover, while others may choose to voluntarily pay them as they arise. Everyone else would still have access to the same, if not better, free-at-the-point-of-use care already available on the NHS.

The typical retort to any shift towards private provision of care is that healthcare should be provided by the government because it is a basic human right. But, if that is the case, shouldn’t we make it as easy as possible for people to buy more of it? And isn’t a system that grants everyone a basic level of healthcare but makes it near impossible for most people to purchase more healthcare infringing on one exercising that right to the fullest extent?

Given that untreated health ailments tend to get worse rather than better, it is often less costly to treat an illness early on, rather than months or years later. In the long run, this type of scheme could generate savings for the NHS because patients are treated before their condition worsens on the waiting list and requires more costly treatment. These savings could then be reinvested into core NHS services to improve care for the poorest and most vulnerable in our society who cannot afford to pay for improved services themselves.

Other types of proposals to allow patients who face exceedingly long waiting times to see a private provider paid for by the NHS are a step in the right direction, but they don’t go far enough in the direction of patient choice. And, to borrow a phrase, the ability to choose to access private providers and more expensive therapies should be made available “for the many, not the few”.

Indeed, the primary victim of the current two-tiered system is the middle class, many members of which would be willing to share the cost of higher quality care but are precluded from doing so due to the distortionary system which prioritises “free at the point of use” above all else, including cases where such an arrangement would benefit both the NHS and patients.

The bottom line is this: we should let patients decide which providers and therapies are worth paying for rather than relying solely on the political system to make decisions on their behalf.

If people did use the freedom to choose alternatives to the status quo, maybe it would then be time to reconsider the NHS’s sacred cow status in British politics, because our healthcare system is not in any way the “envy of the world”. But if we start entertaining new ideas about improving patient choice and access, it may just become one.


Written by Fred McElwee

Fred McElwee is an unaffiliated policy researcher.


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