Malcolm Prowle argues that NHS Wales cannot continue indefinitely to be free at the point of use
The on-going row over the report into NHS Wales by Marcus Longley, brings its future once more into the public spotlight. Although the report covers many important issues, one critical question is not considered. This is whether in the long term the NHS in Wales can continue in its present form of being free at the point of use and funded from the proceeds of taxation. This may seem a heretical question to ask, but asking it must be done.
When the NHS was created in 1948 it was the jewel in the crown of the post-War Labour Government. Since that time many people, especially in Wales, have continued to see it as a beacon of a civilised society, where health care is free at the point of consumption and where access to health care is largely based on clinical need and not ability to pay. Thus the NHS contrasts very positively with other healthcare systems, most notably in the USA where 15 per cent of the population are uninsured and a further 35 per cent are underinsured or fear losing their health insurance. The issues facing the future of ‘Obamacare’ in the USA suggest that these problems remain unresolved.
However, the success story of the NHS often blinds us from considering whether it can continue unchanged into the future, particularly with regard to it being a public service funded almost entirely from the proceeds of taxation. Aneurin Bevan, is often quoted as stating his expectation that once the NHS was founded and people’s health status improved, spending on it would fall.
In fact, as we know, the reverse has been the case. NHS spending has grown enormously over the past 60 years. While we may look back on Bevan’s comments as naïve, we must remember that he couldn’t have anticipated the impact of artificial joint replacements, organ transplants, high technology diagnostic equipment, highly complex and expensive cancer drugs, genetic screening and therapies, nor the impact of people adopting very unhealthy lifestyles and risk behaviours.
In 2002, Sir Derek Wanless prepared a number of reports which considered whether the NHS could continue to be provided from the proceeds general taxation. One was prepared for the Welsh Government on the future of health and social care in Wales. Wanless outlined three main future scenarios for the NHS, involving different levels of funding growth. The most ambitious scenario involving the lowest (but still high) level of growth in NHS funding required major improvements in NHS productivity and a major change in population lifestyles and an acceptance that people should take increased responsibility for their own health. Wanless subsequently concluded that the NHS should continue to be funded from general taxation albeit at higher levels. Unfortunately over the decade since Wanless, NHS productivity has declined and only limited progress has been made in relation to population attitudes to their own health. Many would argue that we have failed to achieve the least ambitious Wanless scenario let alone the most ambitious.
Let’s fast forward to 2012 and see where we are now. At least four factors are in play:
- The demands for NHS services are estimated to grow at 4-5 per cent a year as a consequence of influences such as an ageing population and developments in medical science.
- Many people in Wales still have extremely unhealthy lifestyles, which they seem unwilling to change. These will have major long-term implications for the NHS.
- The UK economy, which generates the tax revenues to pay for public services like the NHS, is in the doldrums with little likelihood of there being significant economic growth in the near future. Consequently, scope for additional funding through economic growth is virtually nil.
- Like the rest of the UK, the NHS in Wales is facing ongoing cuts in public spending for many years to come.
Taking these together, the Wales Audit Office estimates that NHS Wales faces a funding gap of between £252 and £445 million by 2013-14 – that is, the difference between what it would need to stand still, and what it will actually receive.
Moreover, it is important to emphasise that the current situation will not be resolved next year or the year after. All the indicators are that public services in Wales and the rest of the UK will be facing financial austerity for many years to come. Recently the UK Cabinet Secretary, Sir Jeremy Heywood, was quoted as saying that the cuts in public expenditure will last for ten years. Wales cannot be immune from this situation, however much we might like to be.
In the light of these circumstances and the early lessons from Bevan and Wanless, surely we have to ask the almost heretical question as to whether the NHS in Wales can continue to be free at the point of consumption and funded almost solely from general taxation? So what are the alternatives?
Two approaches to bridging the funding gap in NHS Wales are usually put forward:
- Improved Efficiency This is a favourite remedy of politicians who seem to believe it is easy to do and a panacea for everything. But if it was that easy it would have already have been achieved. In reality the NHS in Wales has made some efficiency savings for many years. However, these have been delivered during a period of financial growth where the efficiency savings could be seen as a self-generated top-up to the increased level of funding given to the NHS. The level of efficiency savings that would now need to be generated in the Welsh NHS to close the current funding gap is unachievable. If politicians say it can be done you shouldn’t believe them. Think of the oil tanker analogy. The NHS is an organisation which over the last 60 years has got used to receiving large (and, in some years, very large) amounts of additional funding each year. It is now faced with sharp reductions in funding – an unprecedented situation.
Can the NHS in Wales turn itself into a lean mean machine delivering high quality (and sometimes not so high quality) health care at a vastly reduced cost? It seems to me that the changes that would be needed to achieve would be politically unacceptable. Moreover, in Wales, the challenges are doubly difficult because policies such as competition are not even to be considered, on ideological grounds.
- Service Reconfiguration The Longley Report which has caused such a stir this week, is largely about the need for reconfiguration of health services in Wales. The report makes a strong case for reconfiguration in a number of clinical areas in order to meet the vast challenges of the future. However, whatever its merits, the report is not claiming that reconfiguration will deal with the financial challenges facing NHS Wales. It actually states that the evidence on the costs of hospital re-configuration is inconclusive. Sometimes it saves money, sometimes it is cost neutral, and sometimes it increases cost. It is hardly a solution to the financial hole the NHS Wales finds itself in.
If the above options are unlikely to solve the financial problems what other alternatives are available. There seem to be two main contenders:
- User Charges The NHS already levies a number of different charges which are small in scope and revenue, and in Wales the range and scope of these charges are less than in England. One policy option would be to increase the range and scale of user charges in the NHS in order to raise more revenue. Even in the socialist havens of Scandinavia there are a number of patient related charges which are accepted by the population as being fair and which raise revenue. The health policy group, “Doctors for Reform” have argued that many NHS patients are already routinely seeking paid options to top-up their NHS entitlement, in order to access new kinds of care, faster access and higher quality. Thus the service can no longer be regarded as free at the point of consumption for everyone. They subsequently argue that the incidence of such co-payments is so haphazard and inequitable to the poor that it would be better to address the issue head on and introduce a more uniform and fairer approach to top-up payments for all patients.
- Health insurance A yet more radical option would be to restructure NHS finance completely and move towards some form of a health insurance model where people (or the government in some cases) would pay monthly insurance premiums. In line with the principles of insurance, premiums could be linked to risk, so that people adopting unhealthy lifestyles would pay more, thus providing a financial disincentive to such behaviours. Whenever the issue of health insurance models are discussed many people throw up their hands in horror and talk about the USA and how bad its health system is, which of course is true. However, this ignores the fact that many European countries operate perfectly good health insurance models for funding health services. There are many different models available which take account of matters such as health care for the poor.
At the end of the day politicians and health professionals are likely to throw up their hands in horror at these alternatives and say something like “over our dead body”. The problem is that if something isn’t done soon and we fail to face up to the issues, then some way into the future, perhaps in as little as five or six year’s time, lack of health service funding will result in unacceptable consequences.
Can the NHS continue indefinitely to be free at the point of consumption and funded from the proceeds of taxation? I don’t think so?
Malcolm Prowle is right – we are a very different Wales from when the NHS was introduced and Bevan was not always right in his assumptions. My understanding is that almost immediately demand increased and not only for spectacles and dentures – hospital consultants were perceived as more ‘expert’ than their local GP and this placed immense pressure on hospital services, leading to an immediate shortage of some 40,000 shortage of nurses. This pressure has never gone away and demands of an increasingly dependant unhealthy society make the situation untenable. Most of us know the basic economic theory of ‘butter or guns’ but so few politicians and NHS managers are willing to make the radical strategic changes necessary to make services fit for the future. I agree that private medical insurance and/or specific service charges are a viable way forward but in a country that perceives itself disadvantaged and poor relative to the rest of the UK, sometimes wallowing in self pity, this is a very contentious route. Placing options on the table, clearly explaining and reinforcing the choices would help a seemingly intransigent electorate come to terms with the realities. At the end of all visits and interventions provide a dummy account, a ‘ Did you know this service cost £xxx to provide’ note might help. Come on politicians, come out of your trenches, treat the electorate like adults not children and get on with the long overdue job of reform!
A very good and thought provoking report, but it is not just the NHS that is facing a total melt down, but the whole welfare compact that was designed for the 1940’s, rather than the economic world that now faces us, and rest of western world. The issues are going to have to be dealt with at some stage, particularly as the capacity of the UK economy to fund the services provided by taxation/borrowing might come under great strain if the euro implodes as looks likely in near future. I think that any civilised society needs to protect children and adults who suffer illnesses through no fault of their own, however this current all-embracing provision might actually be creating the disastrous social conditions/attitudes in people who plainly are causing damage to themselves and expect other people to pick up the burden. I think that most people are reasonable and accept changes in the world as that’s the nature of it, however the political class who need ‘power’ are loathe to tell people the truth as it might not get them elected, which would put an end to their lifestyles. The worrying thing is that by this over-borrowing for current consumption both private and public are merely passing the problems on to our children and grandchildren which is not right at all. The other side is that ‘society’ must make it plain to its people that they are a)expected to work and not if in locality they must move, b)treatment of injuries due to car crashes/sports injuries etc etc must be met by private insurance. I recent spoke to a doctor of some experience who candidly through the NHS had about 15 years before it would go to the wall due to its internal contradictions. What ever is decided there are some unpalatable decisions going to have to be made in the next few years.
Well said Mary. I agree with what you say.
Your idea about presenting patients with a dummy account is a good idea but I fear it is too late for that sort of thing now. That should have been done years ago and similar accounts should have been presented to patients who did not attend appointments. I am afraid only radical actions will now achieve any form of sustainability for the NHS. Unfortunately I doubt whether any of our politicians will have the guts to do this.
Wales has lost £500 million to pay for the London Olympics, and is getting little or nothing in return. What about Wales’ share of the £20bn for two aircraft carriers with no aircraft, or the projected £100bn for the renewal of the UK’s nuclear arsenal? Then there’s Wales’ share of the £4m a year spent on killing people in Afghanistan (£44bn so far) and in Iraq (£28bn) together with the overspend of £38bn by the MoD. How much was wasted on the NHS computer system in England (£7bn?) which had to be abandoned? Let’s not mention the banking bailouts, and the creation of hundreds of billions out of thin air by the Bank of England which devalued our wages, pensions and savings, to no good purpose, because the economy is still stagnating. The list is almost endless when it comes to the extravagance, wastefulness and incompetence of successive UK governments.
We all know that the NHS doesn’t work well. By and large we don’t get the treatment we need when we need it. I’m sure there are lots of reasons for that, including our unhealthy lifestyles. But let’s put the blame where it really belongs – on the corrupt, incompetent, undemocratic elite which has been governing and administering the UK for more than a century. Until it’s completely reformed (which will never happen, as turkeys won’t vote for Christmas) the UK will continue its decline and lurch from one crisis to another, and where nothing works well – often extermely badly – in perpetuity. Good luck to the Scots, who have an excellent opportunity to get out of it, and live in a country with a potential for prosperity. Westminster has impoverished Wales.
There are lots of examples of waste and inefficiency in the health service, some protected by misguided political pressure, but it is not easy to eliminate them. So what about some taxes on aspects of unhealthy lifestyles: put VAT or an excise tax on food related to its sugar, salt or animal fat content. Tax sugary drinks and increase the tax on petrol. The taxes revenues could be hypothecated to the health service. If the taxes discourage consumption people would be healthier and if they didn’t there would be some revenue to treat them. It would require facing down vested interests in the food industry so a UK government probably won’t do it. The Welsh Government should seek a private bill in Parliament to give them the power to levy glutton or slob taxes in Wales.
Well a number of issues here.
To Howell, I would say that I am in absolute agreement
To Dave I would say that, whether you like it or not, Wales is part of the UK and these decisions (rightly or wrongly were made by the UK government. That is not going to change. It is dishonest to pretend to people that the funding problems will be solved if we cancel aircraft carriers, Trident etc because that is not going to happen. If we do nothing practical about NHS funding then we face huge problems ahead in the near future.
To Tredwyn, I would say that I broadly agree but you could do the same thing through differential premiums on a health insurance scheme.
Malcolm,
“If we do nothing practical about NHS funding then we face huge problems ahead in the near future”
The point I am making is that these ‘practical steps’ are necessary because of far wider, deeper issues, than simply a matter of NHS funding in Wales. It’s analogous to Nero fiddling while Rome burns.
That NHS funding is in need of reform isn’t in question, and if they improve the standards of health provision, all to the good. I’m merely pointing out that the funding crisis is the result of much more fundamental factors, which as far as I can see, remain unaddressed.
MP, Thank you for kind words.
Dave, You are correct in that the NHS does not operate in a ‘bubble’, but is forced to deal with the a) ageing population, b) the fact that (a) know their rights and will DEMAND attention, and c) the growth of a segment of society who have no understanding of the fact that we are all in this together and must contribute to the greater good by working and acting responsibly to reduce demands on very limited public purse. As LBJ once said about Hoover, it was better having him inside the tent and urinating out, rather than having him outside the tent and urinating in. We have created in Wales a never-never land in that whole sections, in particular BBC Wales and S4C, want us out of UK, however without English money we cannot survive, and no matter how much we get it is never enough and the nats as are agitprop all the time. The real worry is that the Welsh Government is unable to grasp fundamental weakness, as was evidenced by my wife today in a pharmacy in Bridgend, when the counter clerk could not work out how to reduce the price of an item by 10%. This is in the constituency of CJ who is archetypical of Welsh Labour in that he knows how the system works, but is not prepared to do anything about it! The problems are going to be solved by the Treasury who will reduce public expenditure to such an extent that radical solutions will be imposed on the Welsh Government and there will be nothing they can do about it!