The NHS is deep in a long term crisis. Last Thursday NHS England published a "call to action" outlining the emerging crisis. This attracted a day or so of news coverage, focusing mainly on a £30 billion funding gap. But there was no political debate, and the story quickly died. It was replaced yesterday by a story on the NHS's abuse of the "Liverpool Care Pathway" for end of life care, and today by an investigation on struggling hospitals. Both stories are backwash form the continuing struggle of NHS management and staff with financial pressures. But where are the politicians? Labour are waiting to pounce on stories of struggling accident & emergency services to promote a general air of government incompetence on the NHS; the government try to play things down, blaming any problems on long standing issues not tackled by the previous government. A debate about the long-term options for the service it is not. So what should they be talking about?
The dimensions of the crisis are quite clear. Britain's NHS is almost entirely funded from tax. But after the economic crisis of 2007-09 the tax base has shrunk. Furthermore a number of trends, not least the increasing proportion of older people, point to a slowing down of the overall rate of growth in the economy and hence taxes. And yet some of those same trends will create growing demand on the NHS. The government has promised to protect the NHS budget in real terms, much to the chagrin of right wing critics, but this will not solve the problem of rising demand. The NHS England report settled on a headline gap figure of £30 billion by 2021 - after toying with £60 billion by 2025, the number used by Health Service Journal (HSJ) in its preview.
The strategy is to buy time through efficiency savings. As a large, monolithic organisation, with weak accountability, inefficiency is rife. NHS top management has been ratcheting up pressure on the component services by progressively squeezing the available funding, , in a process known as "the Nicholson challenge" after NHS England's chief executive, Sir David Nicholson. The NHS England report claims that this is on track to deliver its target of £20 billion efficiency savings by 2015, but there is plenty of reason to doubt its efficacy, as the number of crises with a financial root seems to grow.
But the strategic point is that efficiency is not a long term answer to the pressures. The NHS paper calls for fresh thinking, but seems to rule out most radical ideas, like charging for, or heavily restricting services, although in doing so it is only holding to the current political near-consensus (the far right does not go along with this, but everybody else does). Let's take a step back and look at this.
The first point to make is that increased demand for health services in the economy will be met by increased supply. Occasionally you hear people suggesting that the economy can't bear an increase. But there is no fundamental economic reason why the proportion of the economy taken up by health care cannot increase substantially. It does not depend overly on imports, and there are plenty of things the public can give up to make way (own fewer or cheaper cars or clothes, go out less, and so on and on). Healthcare offers the prospect of a longer life and less pain; it is a consumer proposition, as I have pointed out in an earlier blog, to die for. If there is demand, there will be supply. The only question is how that supply will be met.
There are broadly four ways the NHS will meet this crisis:
- Taxes will be progressively increased so that taxpayer funded services maintain their current profile overall. This is clearly what is favoured by most NHS insiders, and left wing policy types who like the paternalist structure of the current NHS.
- It will stratify into a class-based service, where only poorer people will use it, while richer people go private. This will happen because the NHS service will be considered dangerous, shoddy, and accessible only after an intolerable wait. This is largely what has happened to NHS dentistry, and it is what will happen if the NHS is allowed to muddle on with its current level of funding (or if funding is cut).
- The NHS will concentrate on excellence in a smaller core of services, while letting people go private for others. However healthcare has few neat boundaries, and it is difficult to see how this would work in practice.
- The NHS will start charging for more services, and accepting co-payments for cosmetic and other add-ons. This may be done with increased collaboration with the private sector, rather like NHS optometric services. This is the direction of travel favoured by the right, apart from those who secretly favour option 2.
These solutions are not mutually exclusive, and indeed option 3 is probably only viable in conjunction with 4.
The first strategic question is how far new taxpayer funding will be forthcoming. Many seem to assume that it will be. John Appleby, economist at the health think tank the King's Fund, assumes this will be so: the economy will be growing again by 2025, and public demand for increases to real spending will return. I'm not so sure: the headwinds on the economy are severe, and I don't see any return to the growth rates we have previously seen for more than a two or three years in a row. Meanwhile demand from other areas of public expenditure has been suppressed and could bounce back. And I think public attitudes to higher taxes have changed, after the general squeeze that has been put on living standards. Some left-wingers assume there is large pot of money available from taxing rich individuals and businesses. This is open to doubt, however, and it has proved a volatile source of tax revenue both Britain in the past, and to other economies, like California's, whose public funding depends heavily on taxes on the rich.
Besides, I do not think that taxpayer funding is particularly efficient. It means that resources tend to be allocated top down according to political objectives, and not where it is really needed. And difficult problems tend to be left unsolved rather than confronted. My guess is that we will end up with option 4, after having given options 2 and 3 a try. It will continue to be a very bruising time for the NHS.
For those that want to avoid this, I think the most promising way forward is to bring health services into a complete rethink of public services to make them more integrated with each other, and centred on people rather than symptoms. And in case you think that sounds like motherhood and apple pie, its practical consequence means dismantling current power structures, and pushing towards democratically accountable local control. That will not be popular amongst NHS professionals, and we know how much noise they can make. Some on the left are starting to think this way, and while I don't trust the left, with their penchant for paternalism, this may be the basis for a useful political coalition. One interesting aspect of this is that the other services (personal care, housing) with which the NHS would be integrated are not "free at the point of use", considered so sacred in the NHS, which may allow the whole question of charging and co-payments to be fudged in a constructive way. Here's hoping that something can be achieved along these lines.