I watched The Big Questions on BBC this morning and found myself getting more and more worked up by the views of those supporting privatisation in the NHS. I find that I can’t watch BBC Question Time because I just so annoyed I then can’t sleep. The Big Questions has a similar effect on me, but at least it’s in the morning.
There are two aspects to the involvement of the private sector in the NHS. One is that private sector companies could supply services to the NHS, the other is that the NHS itself could take on private sector work. It is the latter that some would like increased to a maximum of 49% of any NHS trust’s work. The main argument in favour of increasing private sector involvement in the NHS is that the current model is unsustainable, largely because we have an ageing population. This may indeed be true, but it’s not obvious that more private sector involvement is the solution.
The argument for the private sector providing services for the NHS is that it will be more efficient and competition will drive down costs. Given that the private sector needs to make a profit, it would need be significantly more efficient in order to provide the same level and quality of service for less than the NHS can do itself. The evidence for competition driving down costs appears to be slim (look at healthcare in the US) and so it doesn’t seem clear to me that this argument makes sense.
The argument for the NHS taking on private work is that the profit can then be used to fund the rest of the NHS. This is where I would really like someone to explain the logic of this argument. Currently we spend less than 10% of GDP to provide healthcare to the 62 million people in the UK. It has been suggested that the ageing population and other factors will lead to increased costs and that, therefore, we need a new model (in fact, it was suggested that using public funding for this would lead to a degrade in our credit rating and hence extra borrowing costs).
Let’s imagine that the NHS takes on private work and uses the profit to fund these extra costs. Assuming that we want to maintain the current quality and level of care that the NHS provides, the NHS can’t do private work at the expense of the rest of its services. Those paying for this private work will expect private rooms, good food, and excellent standard of care. This will require extra resources and will, presumably, cost more than the cost of what would be provided to a typical NHS patient (although one would like to think that the level of medical care offered to typical NHS patients is still good, just not as good as that offered to private patients). These private patients will therefore have to pay for this extra level of care and will also have to pay extra in order for the profits from this private work to fund the expected shortfall in NHS funding. This extra payment will presumably have to be substantial if it is going to pay for the funding shortfall without reducing the standard of care that the NHS provides to its typical patients.
Why would anyone willing to pay for private healthcare be happy with this model. In some sense they would be subsidising the NHS. It’s seems that this would eventually fail. The wealthy will presumably have enough clout to argue that this wasn’t fair. Furthermore, if the NHS is to provide private sector work it will have to be competitive. This means offering the service at the best possible price. How can they then make substantial profits. In a sense this seems doomed to fail for exactly the reason that many use to justify private sector involvement in the NHS in the first place.
Another issue is, why is this a better economic model. Currently we provide a good level of care to the entire population for about 8% of GDP. We believe costs will rise due to an ageing population. To solve this we want to increase private sector involvement that will not only provide more expensive care, but will also pay for these extra costs. The fraction of GDP spent on healthcare will therefore increase quite substantially (as it has in the US). I can’t see why this is a good thing. Surely we should be aiming to provide a level of care for everyone at the lowest possible cost. The more we spend on healthcare (as a country) the less there is for everything else. Providing healthcare is, in my opinion, a wealth creating endeavour. However, spending too much on healthcare can damage our wealth creating abilities. Also, why do credit ratings agency care where the money comes from. If providing healthcare in the UK is going to cost 12% of GDP (rather than 8% as it does today) why does it matter if it is all through taxation, or if some is through taxation and some through patients paying privately. Given that the latter will probably costs more, surely providing through taxation is a better economic model as it reduces our total healthcare spending and frees up money for other wealth creating endeavours.