Grimsdale's Ire: 12/01/09

Boris Johnson to challenge government in court if it backs Heathrow third runway
"Boris Johnson confirmed today that he is preparing to challenge the government in court if it "fails to see sense" and gives BAA the green light to apply for a third runway at Heathrow.

The mayor of London urged the government to reject the plans, as both sides ramped up pressure ahead of the government decision, which is expected soon." [Guardian]

Cameron refuses to rule out Clarke return to shadow cabinet despite noises off from eurosceptic right
"David Cameron has received a stark warning from the Conservative right against bringing the ex-chancellor Ken Clarke back to the frontbenches, with a former minister saying the return of the outspoken Europhile in a year of European elections would "split the party".

The Tory leader is tipped to reorder his frontbench team in the next few days, but over the weekend the former Tory chairman Norman Tebbit said his one-time colleague was too "lazy" for frontbench life, while Stuart Wheeler, the party's biggest donor and a staunch eurosceptic, said he would consider withdrawing funding if Clarke was given a job." [Guardian]

Government 'repeating mistakes' by fighting miners in court
"The government is spending millions of pounds in legal fees fighting the claims of sick miners in a move that lawyers say will recreate the mistakes of the past.

Miners suffering from knee problems and chronic lung disease from inhaling dust on the surface of pits were not included in a previous compensation scheme and are being forced to fight for compensation in the courts." [Guardian]

Haroon Siddique: Prince Harry's racist comments still have the power to divide
"Despite Prince Harry's past misdemeanours and the undistinguished record of his grandfather when it comes to race relations, I was still shocked when I heard that he had used the word "Paki". But what surprised me even more were the attempts to play down the nastiness of the term or to pass it off as a term of endearment.

Listening to a Five Live radio phone-in this morning there were a number of people calling in who suggested that it was a mere abbreviation, of the same ilk as "Brit" or "Aussie" and therefore equally inoffensive. But to make such an argument is to ignore the history of use of the word "Paki" in this country. Growing up in west London in the 1980s it was difficult to escape the insult. I was called a Paki numerous times throughout primary and secondary school, as were Asian classmates – regardless of whether they were actually of Pakistani heritage. Sometimes it was spat out by strangers on the street; at other times it was used by supposed friends registering their anger because I had, for instance, misplaced a pass playing football. Often I would respond with my fists, so hurt and impotent did I feel at the time." [Guardian]

Police squads 'deter ethnic minorities'
"Black and Asian police officers still believe specialist squads are "closed shops", dominated by white middle-aged men and a "canteen culture" of working hard, playing hard and drinking hard, according to a report by the Equality and Human Rights Commission, 10 years on from the Macpherson inquiry.

In a major review of the attitudes of police in England and Wales towards race since the Stephen Lawrence case, the commission reports that ethnic minority officers were put off by perceived "old-fashioned working practices" and felt that robbery, anti-terrorist and firearms units were open only to recruits whose "face fits"." [Guardian]

Redundancy: Don't suffer in silence, says Jon Robins
"It is reckoned that every day this year as many as 1,600 people could lose their jobs. That's 600,000 jobs gone in the next 12 months, according to the Chartered Institute of Personnel and Development. Despite the numbers it is almost impossible not to take redundancy personally. It strikes at our core.

As a society we are increasingly - and some would say unhealthily - work-obsessed. Many of us define ourselves through what we do for a living, so job loss attacks our self image, as well as undermining our personal security and ability to provide for loved ones. Don't underestimate the emotional impact of redundancy; those on the receiving end need to rely on their partners, family and friends for support. Loved ones, in turn, need to be there to provide that support." [Guardian]

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Grimsdale's Ire: 21/10/08

The government must sort out council tax 08/10/08
Chris Leslie and Sunder Katwala write on the need for Labour to grab the mantle of council tax reform, in order to avoid being outmanoeuvred by recent Conservative taxation policy. [Guardian]

Wealth gap narrows faster in UK than other developed countries 21/10/08
“The gap between rich and poor since 2000 has narrowed faster in the UK than any other developed nation, according to a major international study released today. The Organisation for Economic Cooperation and Development said the decline of inequality in Britain between 2000 and 2005 was "remarkable"” [Guardian]

Straight to the specialist: Johnson cuts GP referrals 21/10/08
“Patients with back pain will be able to access free treatment from NHS physiotherapists without having to go through a GP, under plans to be unveiled today by the health secretary, Alan Johnson. In a substantial extension of patient choice, he also wants to give people an opportunity to book appointments with speech therapists, dietitians, podiatrists and other health professionals.” [Guardian]

Lloyds chief tells staff: you'll still get bonuses 21/10/08
“The chief executive of Lloyds TSB, one of the banks participating in the £37bn bank bail-out, has promised staff they will receive bonuses this year despite Gordon Brown's promise of a crackdown on bankers' pay following the investment by taxpayers. Eric Daniels has told employees that the historic government intervention will not change the behaviour of Lloyds, which is in the throes of the rescue takeover of HBOS brokered by the prime minister.” [Guardian]

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In the Loop: 30/09/08

Germans gives peeking Google one in the eye: Schleswig-Holstein's answer is NEIN!
30th September 2008
"The town of Molfsee near Kiel in the north-western German state of Schleswig-Holstein doesn't want to be filmed by Google for its Street View program, a service that provides 360-degrees street level images via Google Maps.

The leader of the Christian Democratic Union on the town council told the Lübecker Nachrichten that "we are not going to let this happen". The 5,000 inhabitants find the project "extremely alarming" as criminals can plan break-ins more easily. Germany's Federal Commissioner for Data Protection also has major misgivings about Google's plans, according to Der Spiegel." [TheRegister]

Sky told to hand over footy and film rights: Rivals to get access at fair price
Posted in Government, 30th September 2008
"The UK's media regulator Ofcom has told Sky it should offer to sell rights to football games and Hollywood films to other broadcasters at a fair price.

The investigation into pay TV was begun after complaints were made by BT, Virgin, Setanta and Top Up TV. Ofcom reckons that consumers make their choices of which service to go with based on content not the features of different platforms. Big films and live Premiership games are a big draw for viewers and Sky has "market power" in these areas." [TheRegister]

Tories would decentralise NHS IT: Want patient confidence and reined-in data 30/09/08
"An incoming Conservative government would decentralise health service computing and extend competition between suppliers, according to a plan released at its party conference.

The party's NHS Improvement Plan, released on 29 September 2008 by shadow health secretary Andrew Lansley, says the party will replace "Labour's centrally determined and unresponsive national IT system."" [TheRegister]

Secret Service camera bought on eBay: Nikon camera, good nick, includes secret files 30th September 2008
"Today's government data loss shenanigan is a repeat performance of that old favourite - flogging off old kit containing secret information to a random punter through online tat bazaar eBay.

An unnamed 28-year-old delivery man from Hemel Hempstead bought a Nikon Coolpix camera for £17 on eBay. But when he returned from his holiday and downloaded the contents of the camera he found pictures of rocket launchers, log-in details for the Secret Service's encrypted remote computer network marked Top Secret and a hand-drawn diagram linking different, named al-Qaeda cells including individual names and occupations." [TheRegister]

US Congress rubberstamps IP enforcement bill: DoJ suits out, White House czar in 29/09/08
The US House of Representatives on Sunday passed a bill heavily backed by the recording industry that would create an intellectual property enforcement czar position in the White House as well as significantly increase penalties for IP infringement.

The bill passed unanimously through the Senate on Friday after being stripped of a controversial provision that would allow the US Department of Justice to file civil suits against suspected copyright violators on behalf of copyright holders. [TheRegister]

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In The Loop: 10/08/08

Chaos as £13bn NHS computer system falters
A £13bn overhaul of the NHS records system has suffered so many problems that hospitals have struggled to keep track of people requiring operations, patients with suspected MRSA and potential cancer sufferers needing urgent consultations. [Guardian]

Home repossessions up by 48% on last year
The number of homes seized by lenders jumped by 48% in the first half of this year as borrowers, squeezed by the credit crunch and rising mortgage costs, defaulted at levels not seen since the early 1990s property crash. [Guardian]

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Grimsdale's Ire: 10/08/08

Pressure grows on Met boss after fresh claims of racism
Sir Ian Blair's leadership of Scotland Yard looked increasingly fragile last night as Britain's most senior Asian police officer announced that he was launching a legal claim against the Metropolitan Police over allegations of racial discrimination. [Guardian]

Call for Bill of Rights on homes and health
Britons should be guaranteed a legal right to a decent standard of living, health and housing under a Bill of Rights, according to a report by an influential group of parliamentarians. [Guardian]

Coal plant protesters injured in skirmishes with police
Protesters battled with police yesterday but failed to shut down Kingsnorth coal plant as the climax of the week-long climate camp ended with a series of skirmishes. [Guardian]

Capital charmer
Decca Aitkenhead interviews Boris Johnson following his first one hundred days in office as the Mayor of London. [Guardian]

Untested drugs offer cancer hope
Thousands of terminally ill cancer patients are to be offered the chance to take experimental drugs that may extend their life by months or even years, The Observer can reveal. [Guardian]

Warning over backlash in bail hostel row
The government has been accused of a 'shocking lack of consultation' over its plans to open hundreds of bail units in residential areas despite fierce opposition from councils. [Guardian]

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eGovernment: Some Thoughts on Public Health and the EU

Using eGovernment to improve healthcare provision is important in boosting accountability to citizens, modernising organisations and lowering costs.

The Internet’s potential as a giant portal to greater and more useful information creates unprecedented opportunity for patients to improve their input into public policy decisions and make decisions on their choice of care. Citizens can be made aware of the latest healthcare developments, such as the UK’s Darzi Review or be able to do research to search for the cheapest price of private healthcare insurance or even research into the benefits of non-critical treatment in other European countries.

eGovernment practices can be effective at improving quality of service and reducing the cost of provision. Firstly, modern communication tools result in EU agencies and organisations working more effectively together, breaking down the ‘silo culture’ of existing organisational procedures and encouraging joined up and more integrated EU health initiatives. Secondly, the costs involved in non-ICT based communications are significant, as the administrative and logistical costs can be huge. For example, modern electronic patient referrals in Denmark are now currently saving 1m a year.

Grimsdale's Ire: 31/07/08

Johnson told he can't suspend Met chief, says leaked email

A top aide to the mayor of London has been given legal advice in the past week that Boris Johnson has no power to suspend the Metropolitan police commissioner, Sir Ian Blair, leaked emails yesterday revealed. The emails - written last Friday and Saturday - concern advice from the most senior lawyer for the Metropolitan police authority. [Guardian]

Met chief challenges Johnson over role

Sir Ian Blair yesterday warned that his post as commissioner of the Metropolitan police was becoming increasingly politicised and that plans by the London mayor, Boris Johnson, to take more control of the force could ultimately be damaging. [Guardian]

Local government: Battle of the Bs as towns adopt identical logos

The troubled history of local council logos has thrown up another spat after rival authorities managed to end up with exactly the same clever piece of design based on one letter. [Guardian]

Arts Council damaged by funding row, report warns

Arts Council England mishandled its last funding round so completely that it ended up receiving "the most damaging publicity in its 60-year history", according to a report which investigated the way the council, after having secured an extra £50m for the arts from the government, bungled its distribution. [Guardian]

Promise of prompt access to family doctors not met

The NHS in England is failing to meet government targets for giving people prompt access to GPs, a Healthcare Commission survey says today. It finds 13% of patients cannot get an appointment to see a family doctor within 48 hours, in breach of undertakings given by ministers four years ago. [Guardian]

Stuart Simpson: We should welcome China's growth, not fear it

Goldman Sachs forecast that by 2050, out of the current G7 nations, only the United States and Japan will be among the world's six largest economies in US dollar terms – and the largest economy will be China, not the United States. The exact date on which China replaces the US as the world's largest economy is uncertain, but barring a major catastrophe it will happen at some point before the middle of the century. China, it seems, is set to be a superpower.

There is much hype and hysteria about this fact. But we need calm heads to see what is really exciting about China's economic miracle. We need to clearly understand the economic reality in the here-and-now compared with what it could be in the future. [Independent]

Multilateralism not dead as a Doha

Like Wimbledon fortnight but without the aesthetic or entertainment value, the annual breakdown of the Doha round of trade talks is becoming a summer ritual. For three successive years, dark warnings of now-or-never and one-last-chance have ended in a fruitless ministerial meeting. It is time to be brave, swallow hard and accept that the Doha round in its present form has failed. [FT]

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Is The UK’s Current Method of Financing and Distribution of the NHS Sustainable?

The UK’s egalitarian post war reforms to guarantee health care for all, prioritising need over ability to pay for treatment was a major reform which has greatly benefited some of the least well off in society. However, being ranked only 24^th in the world in terms of performance on health levels[1] the NHS is no longer the flagship of UK posterity, despite its redistribution and efficiency benefits. Many other countries differing styles organisational structures, and funding and allocation mechanisms have made the UK’s health service comparably less successful. Heavy investment by the Labour party in order to improve equality and efficiency of service has proved unsuccessful raising some questions as to the long term sustainability of some of the NHS’s founding principles. This essay is focusing on whether reforms to the funding structure and aspects of its distribution of funds would help to alleviate some of the problems in the UK’s health service.

Background on Health Care
Polikowski considered that for most governments, health services policy pursues “three objectives: universal access; affordability; and comprehensiveness of covered benefits”[2] and that universal access is a highly valued principle in most industrialized countries. In the UK the founders of the NHS planned for a system that would be able to treat everybody. The 1944 White Paper proposed that the proposed service “must be ‘comprehensive’ in two senses – first, that it is available to all people and, second, that it covers all necessary forms of health care.”[3] It was assumed that “making health care free at the point of use would lead to equal access: equal financial access results in equal effective access.”[4] This was considered to be of benefit to all, as improved access to medicine and higher qualities of treatment would allow the infectious diseases of the day to be overcome. This public good would consequentially benefit all, as the cost of healthcare would eventually fall, as a fewer people became ill and the health service benefited from economies of scale from treating all people in the UK.

Marchand felt that public provision can work well as a sorting device “if low income citizens choose the publicly provided good, while high income citizens go private. The latter contribute to public revenue through income taxation, which is then used to finance the delivery of the private good to the former at a price below the marginal cost.”[5] Consequentially, the rich thus finance the consumption of the poor indirectly.

However, this does not appear to be the case. Firstly, people are living “long enough to contract other diseases that are just as costly to treat, and often more costly because they require expensive medicines or treatments or technology.”[6] Secondly, spending increases in health care creates “higher expectations for quality and access from the public, and from professionals for better pay, conditions, infrastructure, and equipment.” For Butler, “as the population is getting richer it is demanding more and more so that the NHS has to intervene “on health problems that years ago they would have bourne quietly as not being worth the doctors time. And if they are not paying directly, the bill is being picked up by taxpayers, why indeed should they hold back?”[7]This is backed up by Maynard, who observes that this pattern is creating an increasingly ‘medicalised’ society, with no level of expenditure at which all public and professional expectations can be met.[8]

As a result of the Labour Government’s major investment the proportion of private expenditure in total (current) expenditure on health care growing from 10.5% in 1980 to 17.8% in 2000.”[9] This helps to explain why the NHS has become one of the worlds largest employers and a budget now larger than the GDP of 155 members of the UN.[10] However, there are growing concerns that the NHS is becoming too large and too complex to coordinate effectively, resulting in diseconomies of scale. Butler suggests that large centralised state monopolies are “hard to run, and even harder to reform. If their funding comes from the government rather than from users, they are slow to change in response to changing user demands. Since they are not facing competition, they have little incentive to innovate, or raise quality, or keep their costs under control.”[11] This is backed by NHS’s finances are still in trouble, with “many trusts reporting deficits and some plainly unable to bring their budgets under control.”[12]

There are even concerns that the NHS is failing to provide equal access. As Cooper suggests, “there was nothing inherent in the 1946 Act which could have systematically brought equality about.”[13] One of the main reasons was that during the conception of the NHS different parts of the country had significantly different levels of bed and staff, with Powell suggesting that The NHS inherited a very unequal geographical pattern of provision. [14] Similarly, while Klein recognises that there were some efforts to correct the distribution of patient care he still contends that the hospital sector “largely saw an incremental pattern of resource allocation that perpetuated existing inequalities.”[15]Powell even goes as far to suggest that Labour’s 1997 White Paper’s aim to deliver ‘fair access’ will achieve little.[16] Harrison also feels that there are limits to the NHS’s desire for equity, citing the introduction of charges of prescriptions in the 1950s. However, these criticisms may be too loud, as the UK was ranked 8^th in terms of responsiveness of health systems and level of distribution by the WTO.[17]

Direct Taxation
One of the major reasons for these issues occurring is the method of health make funding available, as well as to set the right financial incentives for providers, to ensure that all individuals have access to effective public health and personal health care. This means reducing or eliminating the possibility that an individual will be unable to pay for such care, or will be impoverished as a result of trying to do so.” [18]

Following the last Conservative Government the ratio of investment had reached historically low levels, of 7.3% of total expenditure of GDP. To deal with this the Labour Government has implemented a sustained large injection into the NHS, raising the proportion of private expenditure in total (current) expenditure to 8.3% of GDP.[19] However, the expected renaissance of healthcare has failed to materialise leading to commentators to suggest varying changes in the way health care is provided in the UK.

The majority of these criticisms come from libertarian arguments. They believe that the “achievement of freedom requires that individuals are free to make their own choices, constrained by Government only to the minimum necessary extent to provide security and legal systems that protect private property rights and ensure contracts are enforced.”[20] It is assumed that in such a system “individuals will pursue their own interests and those unable to make their way will be cared for by charity, funded by voluntary economic growth and ensure the freedom valued so highly by libertarians.”[21] Despite the increases in funding in the last couple of years the NHS’ finances are still in trouble, with “many trusts reporting deficits and some plainly unable to bring their budgets under control.”[22] Of course there are a number of factors which could help to explain this crisis, such as demographics. However, it is still the case that the centrally funded system in place permits inefficiencies to continue.

Egalitarians who tend to be supporters of the NHS put “equality of opportunity forward as the primary social goal. In such a society all individuals have the right to basic goods and it is for society to define what these basic goods should be. In this world lack of achievement must not be punished and collective mechanisms are needed to ensure all receive care. For egalitarians equalising opportunity may necessarily involve restricting the freedoms of others through taxation and the law”[23]

It has to be remembered that the UK has a very unique system of health care funding, with some 83.4% of healthcare spending in the UK came through the state (see table below). Of the Organisation of European Cooperation and Development OECD countries, the public sector share was higher only in Luxembourg, some Nordic countries (Sweden, Norway, Iceland) and some former Communist countries (Slovakia, Czech Republic).”[24]

Structure of health system financing and provision in four countries p102[25]

For the Government direct taxation makes it easy to control expenditure compared to indirect or national health insurance. This is because they have some degree of delegated discretion in setting contribution rates. The method of funding is seen as an institution by many, making it difficult to reform, with many considering proposals for ‘patient participation in health care financing’ to be “misguided or cynical attempts to tax the ill and/or drive up the total cost of health care while shifting some of the burden out of government and insurer budgets.”[26]

Hypothecated Taxes

Hypothecated taxes have been mooted in the past, in order to make people understand how much the NHS costs. This visibility is assumed to reinforce the opportunity cost of health care and that it is not free and hopefully discourage people from making excessive demands on the system. For libertarians such as Butler it would then become possible to stimulate competition through allowing people to contract out of it. This occurred for state pensions, where people were able to divert their money into their own private-sector pension plan rather than the state pension.

However, the Treasury has deep-seated objections to hypothecated taxes, as if they conceded the principle “then motorists would expect the whole of the taxes they pay to be spent on the roads, not a quarter of it; which drinkers might object that very little of their excise duty they part with goes to deal with problems of alcoholism or drunkenness, and that the duty should be reduced; while peace campaigners may demand to be excused their contribution to the defence budget.”[27]Butler even suggests that it could even have the opposite effects, increasing demand as people attempt to increase their return for their taxes. It is also unlikely that the ability to contract out of the NHS will be pursued, as the Labour Government closed down the state-pension exemption. The public has little enthusiasm for rebates, as they are perceived as being less than the average health spending and favouring wealthier people. Similarly, “if it is higher, then people argue that health spending on those who choose to remain in the state system will be sorely reduced. Many people who take the rebate would be insuring privately anyway – the so called deadweight cost.”[28]

Local Funding
Just as the Labour Government is decentralising its influence over local health authorities it may be worth considering the possibility of local funding. In Denmark 80% of funding is raised locally by 14 country councils, making it a major issue in local elections.[29] Commentators such as Butler believe that this makes people more focused on healthcare spending, as it is less opaque than the Treasury operated system that currently exists.

There are concerns that such a system would make it more difficult to redistribute funding between regions in terms of equity. Also the council structure is not developed enough sufficiently to take on such a burden, with councils struggling to justify current budgets to their electorate as a result of funding structures in place. Also, Butler fears that such systems would be built upon local monopoly (or monopsony), with comparisons between local areas “much more limited than they would be in a completely free private market.”[30]

National Insurance Schemes
The fairness argument put forward by egalitarians has merit but it does not necessarily require the state to pay for an provide all medical care. As Butler points out, “the state does not run and finance grocery or clothes shops; rather it supports the incomes of those who cannot otherwise afford food and clothing, so that they are empowered as customers in those markets. It does not fund people who can fund themselves.”[31] The UK’s model is an exception, with most other countries operating some form of national (or social) insurance scheme, with varying forms of competition and cover.

Varying National Styles
Being ranked 4^th in terms of performance on health levels France is seen as operating a successful national insurance scheme.[32] There employers and employees both pay towards a basic health care package, around 20% of the total payroll, with employers paying close to two thirds.[33] The system permits citizens a good choice of family doctor and can contact specialists without having to see a gatekeeper. Despite this 85% buy private insurance in order to improve the comfort and privacy of care whilst in hospital. Similarly, Australia operates a universal hypothecated tax but 50% of Australians purchase private insurance from independent providers.[34] This method is actively promoted by the government through generous tax rebates and ensuring that premiums do not vary according to health risk.

More market based schemes exist in countries like Switzerland, which has a compulsory social insurance system that is paid by individuals not employers, and where the insurance funds actually compete between each other based on government approved standards. There are a variety of schemes available in the USA but is predominantly based around private insurance and usually paid for by employers. There are government-financed systems such as Medicaid and Medicare for poorer families and the elderly but there are many disadvantaged people who do not qualify for it. The USA model is very expensive, with 13.3% of total expenditure of GDP compared to the UK’s 8.3%. to deal with this some citizens end up choosing health management organisations, where members contribute owner premiums but access to service is restricted to an actively managed gatekeeper function. However, many eschew this system in America, as many “resent the rationing implicit in the HMO model, contrasting it with the free access afforded by the comprehensive insurance system.”[35]

An interesting mix of these different funding styles exists in the Netherlands, which is part tax funded and part social insurance. Tax funding covers long-term, uninsurable or catastrophic events or illnesses. However, for acute care there is compulsory social insurance, with contributions being income assessed. For Butler, the Netherlands has a good way of mixing tax funding for unaffordable items, although he does recognise that it does “lead to almost constant debate and political pressure to include more and more items in the free, tax-funded part of the system.”[36]

Private Funding

Critics of NHS funding such as Bosanquet consider that real reform must extend to demand as well as supply: “A more dynamic NHS required a national environment where there are independent sources of funding. Without change in funding, any supply side only reform is likely to run into new problems of rationing as improvements increases the demand for services. The belief that it will be possible both to have reform and continue with taxation as the sole source of funding is unrealistic.”[37]

The perceived advantage of private health organisations is that if care is perceived to be free, people would demand more of it, making demands on trivial conditions. For Harrison “if the patient sees or suffers at least some of the cost can such over demand be avoided” and that the question is “how to restore that link while at the same time ensuring that it does not deter people from seeking and getting the medical care that they truly need.” [38]

There appears to be a benefit from taking some services from the straightjacket of direct funding. As Bosanquet suggests, “although core services will be tax funded there will be many supplementary services at differing levels where they will be an element of co-payment. This is already happening in services such as those for infertility and for services such as physiotherapy.”[39] In the future as newer but more expensive treatments emerge it is unlikely that offering non-critical services free of charge will be efficient or even equitable, given the fact that many people who would be able afford such treatment would be able to receive it without any financial contribution or assessment.

An econometric study by Besley et al for the demand for private health insurance in the UK suggested that insurance is a normal good and that among the six regional public health authority quality indicators, only the size of the long-term waiting lists shows up as a significant explanatory variable.[40] These conclusions when combined with second best arguments as a result of interfering in markets lead to Marchand suggesting that the coexistence of a public and private health sector, with waiting times in the former, enacts redistribution and that “negative redistributional side effects are part of the price tag for policy measures aimed at reducing waiting times/lists.”[41]

Any enlarged private health care system in the UK will still be a mix between public and private provision. For Merchand this compromise is never desirable, as the redistributional effects are of second order relative to deadweight losses; that actuarially fair sickness insurance that protects people without private health care insurance against waiting time risk “though desirable from the citizens point of view is detrimental for the in-kind redistribution agreement.”[42]

Pooling

Clearly any regulatory issues regarding the way insurance schemes are implemented. There are concerns over selection behaviour in a more market orientated health care system. Either the health organisations will create a pool of customers with low risk (an example of risk selection) who will contribute but not cause expense, or the high risk consumers will claim more (an example of adverse selection). As a result the WTO warns that any system “becomes a battle for information between consumers (who usually know more about their own risk of requiring health interventions) and the pooling organisation (which needs to know more about consumers’ risks to ensure long term financial sustainability).”[43] This increases costs on the service in order to maintain competitiveness may be significantly larger than the financial benefits from market reforms.

If risk selection predominates and there is weak regulation then the WTO feels that the poor and sick will be excluded. Categories such as the disabled or the elderly would be denied treatment in an unregulated market if they had not saved enough income. At the same time the healthy and young would tend to not need the services for which they had saved. It would be important to create a structure in which “people benefit from mechanisms that not only increase the degree of prepayment for health services, but also spread the financial risk among their members.”[44]

However, it must be remembered that although larger pools offer better economies of scale after a while very large pools (such as the NHS) lose their advantage. This notion of multiple pools existing successfully in an economy without fragmentation is one of the strongest arguments for reducing the scope of the NHS.

Pooling to redistribute risk, and cross-subsidy for greater equity

(arrows indicate flow of funds)[45]

Charging

Currently charging exists for medicine and some medical equipment. It is not a significant source of revenue, with prescription charges only bringing in less than 1% of what the NHS costs.[46] However, the scope for expanding large or lengthy medical interventions is quite controversial but crucial, as it is a key battleground between egalitarian and libertarian policy makers.

Charges have existed since the 1950s on grounds of efficiency, as the need to pay a small amount towards the cost of mechanism helps to deter people from purchasing unnecessary medicine. However, for Harrison it is important to deal with the ‘worried well’, as it may identify illness earlier than would occur if price barriers reduced utilisation.[47]

There is an equitable element built in to the UK charge system, as it is still subsidised. In France, the cost is greater throughout its health service. However, the government repays up to 75% or 80% of the cost for the poorer patients, with the poorest six million receiving services free.[48] This system does tend to be bureaucratic and expensive as a result of level of means testing required making such an implementation in the UK possibly inefficient.

Conclusion
There is nothing particularly wrong with the NHS. It is an efficient run service which has passed Polikowski’s standards of universal access, affordability and comprehensiveness of covered benefits. There may be questions over its efficiency but its ability to distribute has been successful despite flaws. Despite an enthusiasm for market based reforms the Labour Government has been focused on improving the NHS and reversing the slide that occurred during the previous Conservative Government. However, this has not been as successful as hoped as the larger budgets have been absorbed by needed wage increases and patients with higher expectations for health care. The new Conservative leader has broken ranks from the traditional party line in support of the NHS. However, the cracks that are appearing in the NHS system are starting to show. There are battle lines appearing over the need for more regional redistribution and increased use of private health care. Despite this the public is relatively content with the current financing mechanism for healthcare and fearful of suitable alternatives, making the financing and principle distribution of the NHS likely to be the same for the foreseeable future.

Appendix

Fairness of financial contribution to health systems in all Member States,

WHO index, estimates for 1997[49]

Overall health system attainment in all Member States, WHO index,

estimates for 1997[50]

Health System Performance in all Member States, WHO Indexes, Estimates for 1997[51]

Health System Performance in all Member States, WHO Indexes, Estimates for 1997[52]

---

[1] The WTO Health Systems: Improving Performance (The World Health Report) 2000

[1] OECD OECD Health Data (OECD, Paris) 2003

[2] p. 133–142. Polikowski, M. & Santos-Eggiman, B. How comprehensive are the basic packages of health services? An international comparison of six health insurance systems (Journal of Health Services Research and Policy), 2002

[3] P7 Powell, P and Exeworthy, M Equal Access to Health Care and the British National Health Service (Policy Studies, Vol 24, No1), 2003

[4] p4 Powell, P and Exeworthy, M Equal Access to Health Care and the British National Health Service (Policy Studies, Vol 24, No1), 2003

[5] p2 Marchand, M and Schroyen, F Can a Mixed Health Care System be Desirable on Equity Grounds? (Scand J of Economics) 2005

[6] p294 Butler, E Alternative Funding Models (The Future of the NHS)

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