What is the best way to fund the NHS?

August 29, 2002

The NHS in the United Kingdom is struggling to meet the needs of patients as costs continue to rise. A debate article in this week's BMJ asks: Does the current system of funding need to change?

David Green and Benedict Irvine believe that the case for social insurance deserves a more serious hearing than the British government has so far given it.

For example, social insurance schemes allow individuals to see clearly (usually on pay slips) how much they are paying towards care, so they can tell whether they are getting good value for money. Under social insurance systems, patients are treated as valued customers. This may go someway to explaining why satisfaction rates are generally higher in countries that have a social insurance scheme, say the authors.

Professional autonomy is more fully respected under a social insurance scheme, while funding health care from general taxes has proved to be an ineffective way of bringing the expectations of patients into balance with the treatment capacity of the system.

To demonstrate their point, the authors cite the 2000 World Health Organisation ranking of countries according to the responsiveness of their health systems to needs. The only tax based system in western Europe ranked in the top five was Denmark. The United Kingdom languished in 26th position.

Supporters of change contend that Britain is out of step with the rest of the world. Yet other countries in Europe rely largely on taxation and no western European country has changed from a tax based to an insurance based funding system, argue Martin McKee and colleagues.

Retaining the ability to raise taxes from various sources, including investment income and company profits, makes it possible to compensate for imbalances across the economic cycle, they write. In contrast, social insurance seems less sustainable.

Some people suggest that patients should pay more, but no evidence exists that charges deter only unnecessary use. It is also wrong to think that social insurance eliminates waiting lists, they add. Like Britain, the Netherlands has long waiting lists and sends patients abroad for elective surgery.

The main advantage of funding from general taxation is that it recognises that those whose needs are greatest are least able to pay for care - the young and the rich subsidise the old and the poor. A shift to competing insurance funds, no matter how well regulated, and an increase in what people themselves pay, will inevitably relieve this burden. Is this the real issue? they conclude


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