Continues from Part 1
The transition
Nothing was different on the day after. The basic idea of the transition was a fairly simple one. The term “insurance-based system” used to sound extremely scary to a British audience, but in a sense, every healthcare system where patients do not pay healthcare providers directly is “insurance-based”.
It is just that in the UK, the government was the insurer. More precisely, there were local organisations within the NHS, the Primary Care Trusts (PCTs), which allocated money to NHS providers. Thus, these PCTs performed a role not unlike that of a health insurer in an insurance-based health system.
The HSCA simply converted PCTs explicitly into not-for-profit health insurers. From now on, people paid their PCT directly, rather than giving that money to the government first, although the money was still deducted at source from people’s payroll. This was accompanied by a concomitant cut in income tax (which, at the same time, was merged with National Insurance for the sake of simplicity). A generous means-tested support programme, the Health Insurance Credit, made sure that everyone could afford their premium, and that low-earners were no worse off than before.
The vast majority of the population noticed no material change at this stage. There was now an item on their paycheck which said “Health Insurance Premium”, but since this was broadly cost-neutral for most people, it looked like a mere accounting change. And in a sense – that’s all it was, at first. All the contracts between PCTs and healthcare providers that had been signed under the old system remained in force. If you got sick, you would go to your GP as before, get a referral as before, get a prescription drug as before and/or get specialist treatment as before. A few years later, people would laugh at a Love Island contestant who seemed completely oblivious to the changes in the healthcare system, but this was not nearly as stupid as it sounded: if you paid no attention to it, you would not have noticed.
A few months later, people were given free choice of health insurers. They could either switch to a different PCT (which were now no longer called PCTs, but simply “insurers”), or to an insurer completely outside of the NHS, and their premium payment would follow. Any insurer was allowed to participate in this newly developing health insurance market, provided they fulfilled three criteria:
- They had to cover a predefined minimum package of health services, broadly equivalent to what was on offer on the NHS at the time. They could go above that, but not below: they could not hide exclusion criteria in the small print, or refuse payment for a treatment recommended by a doctor, or demand pre-authorisation.
- They could not discriminate against anyone on the basis of health status, reject an applicant, or exclude coverage for pre-existing conditions.
- They had to maintain contracts with a sufficiently large network of healthcare providers, so that they could realistically offer everything in that minimum package.Insurers with a disproportionate number of “good risks” had to compensate insurers with a disproportionate number of “bad risks”, according to a formula modelled on the Dutch one.
Nothing much happened at this stage either. People were initially reluctant to make use of their newfound freedom of choice, and in any case, there was not much to choose from. Only a handful of insurers had begun to operate on a nationwide basis, and their activities were still so tightly regulated that there was not much difference between them.
John McDonnell’s attempt to fight the 2015 General Election on anti-HSCA grounds backfired. It is not that people had been won over to the new system. It is just that the new system only felt radically different to the old one if you made active use of the new possibilities it offered. The coalition parties did not have to actively defend the new system. They just had to highlight the contrast between what McDonnell had predicted would happen (people dying in the streets, millions going without healthcare) to what had actually happened (not much).
The new system takes root
After 2015, health insurers and healthcare providers were, step by step, given greater freedom of contract. They began to experiment with, for example, different payment formulas, different incentive schemes, different ownership models (most hospital trusts were initially converted into staff-owned non-profit cooperatives) and different models of healthcare delivery.
Insurers also began to offer different healthcare plans. The default option remained a free-at-the-point-of-use plan that was broadly similar to what people were used to from the old system. But alternatives began to emerge. People could now opt for a voluntary deductible in exchange for a lower premium. They could opt for a “managed care” option with less freedom of provider choice, but lower premiums and greater care coordination. Insurers began to actively compete with each other, chasing efficiency reserves and quality improvements.
As the tenth anniversary of the HSCA approaches, we still cannot identify any particular turning point at which the new system started to diverge from the old one. All we can say is that over time, it clearly did. Most importantly, from about 2018 on, the UK’s health outcomes started to converge with the Dutch ones. That should not be surprising. Dutch outcomes are not due to anything in the soil, the water or the air of the Netherlands. They are a product of the Dutch healthcare system, and a similar system in a similar country is going to produce similar results.
“Similar results”, in our case, means higher survival rates for most cancers, strokes, heart attacks and respiratory diseases; it means shorter waiting times, and it means greater freedom of choice. Opponents will never openly embrace the new system, but at least tacitly, they seem to have made their peace with it.
And why wouldn’t they? There is probably a universe somewhere where none of the Cameron-era reforms happened, and where the NHS is now going through another one of its usual winter crises (remember those?). These are virtually unknown in the Netherlands, and hopefully, they will be unknown to future generations of Britons as well.
