April Fool’s Day

Not really a day for joking. Today is the day that a large number of the coalition government’s new policies come into effect. This includes the introduction of the “bedroom tax”, changes to NHS commissioning that many think is one of the final steps in the privatisation of healthcare in England, the scrapping of the 50p tax rate for those earning over £150000, and changes to legal aid, to name some.

I don’t really know what to say about this. I think the “bedroom tax” is terrible, I think the reduction in the top-rate of tax is exactly the wrong thing to do at the moment, and I genuinely worry about the future of healthcare provision in the UK. The mantra that is continually used is that we can’t afford to maintain our current spending levels and we have to wean people off a dependence on benefits. Make no mistake, I would be quite happy if everyone was employed, contributing to the economy and getting paid a salary that allowed them to afford to live decently; and I’m quite happy with there being an income distribution with some being paid more than others. I just think the problems are much more complicated than suggested by the rhetoric used by the current government.

One of problems – in my opinion – is that income inequality has increased in the last 30 – 40 years. The top earners are taking a bigger fraction of the income than they were in the 1970s. It seems to me that if income inequality increases, welfare/social security spending will have to increase to help the increasing number of people on low incomes or who become unemployed. It’s my view that if we want to reduce welfare spending, we should act to reduce income inequality. I’ve written about this before, but since I think income inequality and welfare spending are related I thought I would link to this video (link at bottom of post) of Steve Machin, from University College London, discussing income inequality. It’s quite short and doesn’t really say all that much, but is quite interesting. It’s clear that inequality has increased since the 1970s and that this might be related to changes in technology that mean there is a demand for very qualified people and for those who do very basic tasks (that can’t easily be replaced by technology), but those in the middle doing skilled but repetitive tasks can often be replaced. He suggests that income inequality doesn’t have to continually increase and that good labour policies could help, but doesn’t really suggest what these might be. Worth a watch anyway.
http://cep.lse.ac.uk/_new/news/video.asp?index=2624

NHS privatisation

I wanted to add a link to the video below, which shows Lucy Reynolds discussing changes to the NHS that suggest that we are heading towards the privatisation of healthcare in England and how this could be disastrous. What’s interesting about this is that Lucy Reynolds is an academic who studies “medical and healthcare programmes”. It’s clear that she’s very critical of what is happening to healthcare in England and a lot of what she says certainly makes sense to me. One issue I had was that, as an academic, maybe one should aim to be objective and unbiased when discussing one’s research, and so I wasn’t quite sure what to make of an academic who studies healthcare provision having such strong personal views about healthcare in England. On the other hand, I sometimes feel that academics in the UK aren’t sufficiently political. Aren’t we meant to be intellectual and think about society and the implications of decisions made by politicians on our society. If not, then who else? So, fundamentall, I was very pleased to see someone, who is clearly an expert in this area, discussing – very clearly – why the proposed changes to the NHS in England could have a very damaging impact on our ability to provide decent healthcare for the population.

I don’t want to say too much, but one of the basic messages was that in a publicly funded healthcare system you can prioritise the needs of the patient. It still costs money and so there isn’t complete freedom, but if one assumes that most doctors and nurses went into healthcare in order to help people, it makes sense that the optimal system is one that allows them to put the patients first. In a private healthcare system this is no longer necessarily the case. Legally, private companies are obliged to do what’s best for their investors. They therefore need to optimise their profits. They can’t simply put the patient first. They’re not obliged to treat those who haven’t taken out suitable healthcare. They can refuse treatment if someone hasn’t told them their complete healthcare history when taking out insurance. They can prescribe treatments or tests that may not be strictly necessary. Profit has to come first, ahead of patient care.

Something that has confused me about this supposed desire for privatisation of the NHS in England is that the private sector is already very heavily involved. The NHS doesn’t make anything. They buy all of their equipment, vehicles, pharmaceuticals, etc. from private companies. Also, once the staff have paid their taxes they spend most (if not all) of their money in the private sector. They buy food, electrical goods, pay for holidays, etc. Most of the money that goes into the NHS ends up passing the private sector anyway. If we continue privatising the NHS all that this will mean, apart from the damage it is likely to do to healthcare provision, is that a new set of investors will be making a profit from the NHS. I would have thought that companies like Sainsburys, Tescos, Currys, Thomsons travels, …. would all be slightly worried about this. Surely there’s no great benefit to them to see the NHS privatised. Of course, if their investors are the same as those who will be investing in healthcare companies, maybe they’ll still see the dividends. On the other hand, if the investors are American pension funds, they will effectively be losing money.

I appreciate that you can’t have a successful economy if it is fully public. Similarly, however, I would argue that it’s hard to see how you can have a successful economy that is fully private. You need some kind of balance. Certain things fit well within a market. I can have a choice of foods, types of transport, holidays, entertainment, etc. It is, however, harder to see how you can apply a market philosophy to healthcare, education, policing, the military, the justice system. If you apply a market to these it implies a variety of different provisions and hence some receiving a better level of healthcare (for example) than others. I don’t really care that my car is clearly not as fancy as someone else’s. Similarly, I don’t really care if some people have to catch a bus rather than driving. It’s a perfectly fine way to get around. I do, however, care about my children’s education or about the healthcare that I may receive in the future. I don’t think these type of things should depend on your income/wealth. It should, ideally, be provided at an equal level to all. Getting educated or receiving healthcare isn’t really something you want to have to choose. You would like the best you can get. A private healthcare system may well benefit some but at the expense of others who will be locked out because of the costs, and I think that would be very unfortunate.

Anyway, I recommend watching the video below. It is a little long but she does make a very strong case for why we should resist what is essentially the privatisation of the NHS in England.

The Green Benches

This blog seems to be getting quick a lot of traffic today. Most of this seems to be because of my post about Eoin Clarke and the Green Benches. I can’t see any real reason why there is a sudden surge in interest in this today, but if anyone would like to comment on why this might be, I would be quite keen to know.

Thanks to the comments below, I now know that it is because Polly Toynbee has suggested people go to one of the protests listed on The Green Benches website. For some reason the link in her article wasn’t working (although that seems to now be fixed) and if you google Green Benches, you seem to end up here. The correct link is The Green Benches and I too encourage you to attend one of these protests.

Eoin Clarke and The Green Benches

Eoin Clarke is the author of a blog called The Green Benches on which he has been very critical of the coalition government and, in particular, their apparent attempt to privatise parts of the NHS in England. He does, however, have a habit of apologising for things he has written that have, apparently, turned out to be wrong. He’s apologised to Lord Ashroft for things he said that turned out to be incorrect. He’s apologised to Circle Health, who now run Hitchingbrooke hospital, and yesterday he apologised to Virgin Care.

This is all a little confusing as, although he appears to be hated by many on the right, he is often still given credit for the effort he puts into sifting through lots of information and is regularly given credit for typically providing evidence for what he writes. He has, however, removed all of the posts that he has apologised about, so I can’t even go and check what it is that he said or what evidence he provided. I actually linked to some of these posts in some of my earlier writings. I had wondered if I should remove these but decided that I would leaves things as they are.

After one of his first apologies I thought that it was commendable that he was willing to apologise when he was wrong. I assumed that he was single-handedly digging through lots of complex information and could well make a few mistakes. Now that he’s apologised for the third time, this seems less likely. He is clearly left-leaning and a Labour supporter. He clearly opposes privatisation of the NHS. Was he really making things up to suit his ideology?

What was a little strange was some of what he claimed in his most recent apology. He says

  • Virgin Care does NOT put profit before patient care. Virgin Care has been instrumental in helping to strengthen the NHS by providing high quality services that are valued by patients and improve health outcomes, whilst saving the taxpayer money.

This seems a quite extreme for someone who has been highly critical of NHS reforms in England.  Why did he need, in his apology, to not only correct his claims but to then imply that actually this is a great company who provide a high-quality service that is valued by patients and that is saving the taxpayer money.  It may be true, but I would imagine that, at this stage, the evidence for this is weak. Why did he feel the need to go this far?

It almost feels like it could be some kind of sign. It’s as if he’s saying “I have to apologise, but I’m going to say something very out of character so that you’ll know that I don’t really mean what I’m saying”. I also noticed that he seems, today, to have left twitter. He was getting some fairly severe abuse after his most recent apology, so it may well be that he just couldn’t take this anymore. I don’t really know what to make of this. I thought he was providing lots of interesting and well-researched information about what was going on with coalition policy and with changes to the NHS. He certainly seemed to be annoying a number of people, which would typically suggest he might have been getting close enough to the truth to make people nervous. Alternatively, he was driven by ideology and was making things up to suit his views and also to increase his blog readership. It would be sad if someone who was providing a voice for the left turns out to have no credibility. I think we need people to be doing this, but to be doing it honestly and properly. I guess there might be a more sinister alternative but there is no evidence, at this stage, to suggest that this may be the case.

The Fiscal Cliff

The USA is apparently approaching what is being called “The Fiscal Cliff”.  I don’t quite understand this but I think it is essentially tax changes and budgets cuts that will take effect in January and that neither the Democrats nor Republicans are particularly happy about.  I saw an interesting post from the Centre for Economic and Policy Research, basically suggesting the only way to reduce the US budget deficit was to fix healthcare spending.

The post had the following graph which shows the change in US debt as a fraction of GDP over the next 10 years, and shows how it could vary if different types of healthcare spending were implemented. The options were sticking with current spending (big rise) or changing to that of Australia, Germany, or Canada (big drop).

hc-spending-fig-1

The interesting figure is probably the next one which shows the growth of US debt over the next 10 years, again depending on which type of healthcare spending is implemented. Basically if healthcare spending were similar to that of Canada, Germany or Australia, US debt would be about $7 trillion lower than it will be if current healthcare spending is maintained.

hc-spending-fig-2

I wanted to check if this made sense, so I looked at healthcare spending in each of the USA, Canada, Germany and Australia (and also included the UK). It’s shown in the table below. Basically the USA spends almost twice as much per person than Canada, Germany, Australia or the UK. The table also shows how much of the spending is public and how much is private. What I find amazing is not only that US healthcare spending is so high, but that it is so inefficient that even though it is essentially a private healthcare system (if you want full cover you need private healthcare) public spending on healthcare (per person) is still higher than in Canada, Australia, Germany or the UK.

HealthSpending

The assumption about the figures above is that you maintain the same ratio of public to private healthcare spending. In the USA about 50% of healthcare spending is public. If they could reduce their spending by half (to be more comparable with Germany, Australia, Canada or the UK) they would save (in public spending) about $2000 per person. The population of the USA is 311 million, so this is a saving (per year) of $600 billion. Over 10 years, this would be $6 trillion. The analysis seems about right then. If total healthcare spending in the USA was more like it is in the UK, Germany, Australia or Canada and if 50% were public, over 10 years the US public debt would be $6 trillion lower than it might be if current healthcare spending is sustained.

Why is this relevant to us. Well, it seems quite clear that the US model is inefficient and that healthcare spending in the UK is not only quite low, but also quite efficient. We, however, seem to be moving towards US-like healthcare spending. I just don’t see the point of that. Why evolve towards a more inefficient system. Even if we can reduce public spending (which we may not be able to do anyway) why would we want more of our spending (public and private) to go on healthcare than we need to. If we want to generate wealth, we need to spend as little as possible on providing services (while still providing a decent service). The goal shouldn’t be only to reduce public spending, but to reduce overall spending (or to maintain it if it is optimal). If the most efficient system is one in which public spending dominates (as the above table seems to indicate) then that is the system we should have.

Some thoughts on NHS privatisation in England

It appears as though the effective privatisation of the NHS in England is moving forward, at least according to this post on The Green Benches. Furthermore, it is claimed that the Chairman of the Health Select Committee (Stephen Dorrell) has predicted the end of the NHS providing healthcare that is free at the point of use. Essentially it seems likely that there will be certain procedures that the NHS will no will longer provide for free.

Here are my basic thoughts on the issue. Firstly, I think we simply aren’t spending enough in the UK on healthcare. We spend about 9-10% of GDP on healthcare, or something like $3500 (£2200) per person. Many similar countries spend between 11% and 12% of GDP on healthcare. There are some who spend a similar fraction of GDP, but spend more per capita. If we want to have a healthcare system similar to that of France, Germany, Switzerland, Holland, etc, we should be spending about 20% more than we are today. Equivalently, we should be spending about £500 more per person. Given what the NHS currently provides, it is actually quite impressive that it can do so for 20% less than many comparable countries.

The one solution is to simply invest more in the NHS. Given the current government’s view that reducing the deficit is the main priority, this is clearly not going to happen. They’re also going to keep telling us that the NHS is unaffordable because of our aging society and other social problems that are costing the NHS money. What I suspect that they will do is keep the public funding of the NHS at a minimum. This will allow the NHS to provide basic healthcare and some kind of emergency care. As I mentioned above, to have comparable spending to other similar countries will require spending about £500 per person more than we are today. Those who can afford it, could therefore top up their healthcare through some kind of insurance type scheme. Assuming that one-quarter of the families in the UK could afford to do this, this would add about £7.5 billion to healthcare spending in the UK, but it would only provide coverage for about 1/4 of the population. Everyone else would be left with basic and emergency coverage through the NHS.

A very scary prospect is full free-market, privatisation of the NHS. The only country that really has this kind of model is the USA where total healthcare spending is 20% of GDP, but only about 60% of the population is fully covered. This would essentially result in a healthcare system twice as expensive as we have now but only covering half the people currently covered. Not only would this be morally repugnant, it also doesn’t make economic sense. Who in their right mind would think it a good idea to change to something twice as expensive that only does half of what it did before.

Top 10 NHS Trusts facing privatisation.

I was trying to reblog a post on The Green Benches about the possible privatisation of 10 NHS trusts in England, but it didn’t seem to work. Essentially the claim is that there are a number of NHS trusts in England that are either in administration, facing administration, or in fairly dire financial straights. It is thought that the preferred “solution” to much of this will be to effectively privatise some or all the hospitals within these trusts. This will occur by selling off hospitals or through some kind of franchise deal with a private healthcare provider (as has already happened with Hitchingbrooke hospital and Circle Healthcare). I think this would be a terrible outcome and one that will be very difficult to reverse if something isn’t done about it soon. It will also effectively prove that the current government’s ultimate aim is to privatise as much of the NHS as possible. I would suggest reading the post yourself and making up your own mind.