The UK Health Secretary, Jeremy Hunt, stated on 25th March 2018 that he was considering looking for a 10-year settlement for NHS funding. To create the cash flow for this objective, he raised the prospect of ringfencing an increase in tax or National Insurance. Hunt then made a plea to Conservative MPs, asking for ideas on how to raise money and fund the NHS.

Theresa May suggested a £4bn year-on-year increase for the NHS over a 10-year period. Meanwhile, Lord Darzi – a surgeon and former health minister, has stated that the NHS needs a £50bn year-on-year increase and a further £10bn in adult social care.

As the working population is shrinking and the ageing population is growing, these problems are likely to intensify. If a reducing workforce would be asked to pay increasing taxes, how can the required funding be affordable?

The politics of financing the NHS often gets in the way of real progress. Any injections into the NHS are often dismissed with political party disagreement regarding the size of the amount needed, real term increases and where it should be spent.

Whatever the potential availability of money for the NHS and whether that will solve any issues long-term must now be a serious consideration.

How the private sector interacts – or could interact – with the state system must also be a consideration. Whilst the UK cherishes the concept of ‘free at the point of delivery’, the rest of the world (mostly) is realising the practicalities of an ever-increasing and resource-hungry problem of ‘all care for all people’ without cost.

Being the first country to provide a national health service, the UK has a legacy problem. Countries in the Far and Middle East, for example, began with the UK model but were young enough to be able to change to a public/private mix.

Several European countries also either have a public/private mix – notably Germany – or have co-payments for certain treatments – for instance, France and Italy. Many have tax incentives as well, such as no insurance premium tax for health policies or medical expenditure being tax deductible.

The UK has also flirted with partial contributions to treatment (prescription charges) and even tax relief for PMI.

In 1994, tax relief at the basic rate was introduced by the Conservative government for plans for the over 60s. By the time it was abolished in the Labour government’s first budget, there were already 550,000 people covered with a cost to the Exchequer of around £110m. Today, rather than a tax relief on health insurance, we now have an Insurance Premium Tax charged on top of the cost of the cover.

It should also be noted that, many years ago, patients were being sent for private treatment as the NHS struggled to cope with waiting lists. A report in 2012 suggested as many as 17% of hip replacements and hernia repairs, and 6% of gallbladder removals in England, were taking place in private hospitals on behalf of the NHS. Today, under the e-referral system, GPs can refer eligible patients to private hospitals on the NHS.

Whilst the privatisation of healthcare is widely opposed by the public, some elements of privatisation have already crept in. The sensible next step would be to ask the politicians allow experts to take the reins.

Some important issues include:

  • What the key cost areas are today for NHS treatments.
  • What the key costs are likely to be in the next 3, 5 and 10 years.
  • What the characteristics of the population are that are being affected by those areas of cost
  • How the private sector can relieve the NHS burden (either in the key cost areas or elsewhere to enable resources to be diverted to key cost areas)

If we know from analysis that over 65s are likely to require significant treatment and disproportionate NHS hospital bed time, perhaps a re-introduction of a specific tax relief combined with a risk equalisation model, like in Ireland, would relieve the pressures on the NHS. This would also give insurers an interesting portfolio structure they could work with.

Alternatively, some treatments could be taken out of the state system altogether and put into the private sector. Payment could be administered through the government at a designed cost reflective of the private sector efficiencies with quality control being monitored.

These types of models should not only look at current costs but predict future demands and balance both the cost and the benefit of the solution. The benefit is not only whether a treatment can be enacted more cheaply if privatised but if it would be cheaper and more efficient than in the public sector.

Now is the time to have a radical review of how the population can be better served in its healthcare needs today as well as tomorrow without unrealistic burdens being imposed on both the taxpayers and the NHS.