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Editor's blog Tuesday 21 July 2009: The confidence interval over NHS future funding and longevity

Good morning. New figures on the government's lower tax revenues reported in today's Indpependent set an unsurprising context for two recent reports.

The first, and rather disappointing, is the Social Market Foundation's From feast to famine:  reforming the NHS for an age of austerity. The SMF seeks to explore links between the market and the state, to "marry markets with social justice and takes a pro-market rather than free-market approach".

This report is the conclusion of their two-year health project, which has been sponsored by NHS Connecting for Health, Bupa, Pfizer & Standard Life Healthcare. Its obvious conclusions are that the NHS needs to manage demand and get better value fro existing funding (rightly recognising the very obvious fact that the other option - more above-inflation funding as seen since 2000 - will not be forthcoming).

In its credit, the report also rightly recognises that greater local variation is an inevitable and potentially beneficial consequence of real local autonomy with commissioning.

Solving a problem that isn’t there
However, the report’s examples of how it will achieve demand management and greater efficiency are not wholly convincing. Its eye-catching proposal that the better-off should pay £20 per GP visit, capped at £100 per year, got the headlines.

Yet the authors know (and admitted in a piece for the Sunday Times) that this charge “would not raise revenue for the NHS, nor would that be its aim. But it should be sufficient to encourage people to think more carefully about how to manage their health needs cost-effectively”.

Umm … perhaps for a very few, more thought would be given to the cost-effective option. Yet the massive rise in A&E attendance over recent years suggests that this is not true. The administrative cost of the charge would be high (staff time, receipts, chip and pin terminals on every GP desktop). It could easily cost more than it raises in the short term.

More to the point, the study offers no evidence that over-user of GPs by the better-off is a cause of unnecessary r indeed avoidable NHS spending. By contrast, repeated studies – the best-known being the work of Barbara Starfield - have shown that good-quality primary care is associated with better outcomes and lower overall cost. GPs’ real strength lies in their ability to know much more often than not when someone coming to see them is seriously ill.

This looks uncommonly like an attempt to solve a problem that isn’t there, for ideological reasons more than practical ones.

Spare us a Royal College of Commissioners
Its other proposals are either already becoming policy (a reduction in national targets to become a minimum service guarantee; new powers and responsibilities for commissioners to improve the quality of healthcare providers); interesting but probably unacceptable to medical trades unions (local contracts for GPs and consultants); Lib Dem health policy (public petitions that can trigger a review of commissioner performance); or blatantly silly (the establishment of a single body to regulate commissioners
and a new ‘Royal College of Commissioners' to give commissioning higher status).

The problem with commissioning is not regulation or status (and the idea that a Royal College of Commissioners would develop anything other than high costs and a good wine cellar is farcical).

The problems with commissioning are that a) as Chris Ham has pointed out in his 2008 HSMC paper Health Care Commissioning in the International Context: Lessons from Experience and Evidence, it is not done very well anywhere in the world, because it is difficult; and, b) it has been prioritised long after the strengthening of providers (FT status; payment by results, Old Uncle Tom Cobbley and all).

Other ideas borrow from Conservative health policy; from the sensible end - a new Minister for Health Inequalities based in the Cabinet Office
- to the less sensible abolition of strategic health authorities.

The report’s lines that the NHS should be “fair to all but not free to all” encompasses some economically defensible if middle-class-unfriendly ideas such as means-testing. The problems around this have always been around the opportunity cost and the universal nature of the NHS offer under the single-payer system.

The financial thermometer for future NHS funding
The Kings Fund and the Institute for Fiscal Studies offer a detailed analysis of the financial climate How cold will it be? Prospects for NHS funding 2011-2017.

As with the 2002 Wanless reviews for HM Treasury, the report offers three scenarios – best-case (‘tepid’ spending increases of 2% followed by 3%); middling (‘cold’ meaning zero real growth – the minimum compatible with a probably Conservative administration’s promises); and apocalyptic (‘arctic’ annual real-terms reductions of 2% in early years followed by 1% in later years).

The Fund and the IFS are not respected think-tanks without good cause, as the report shows. It notes that all three options fall short of the assumptions made by Wanless in 2002, and only the most optimistic ‘tepid’ scenario covers the expected costs of demographic need increases.

It suggests that to fill the likely shortfall, productivity would have to rise “3.4 to 7.4 per cent per year”, contrasting this with usual private-sector economies of 2% annually for productivity. If the report’s ‘apocalyptic’ scenario comes true, it calculates that “total public and private health care spending as a percentage of GDP would reduce to around 7.9 per cent, virtually wiping out all the increase seen since 2000”.

However, it is slightly surprising to find the report’s summary apparently assuming that European health spending will necessarily continue to rise at the general trend rate: “even under our optimistic funding scenario, the share of national income devoted to health care will flatten off from 2011/12–2016/17, and the gap between other European countries could widen”. It is unclear that economic conditions in Europe will necessarily be vastly better than those in the UK, as the report proper observes.

It also states that “there have been only three three-year periods in the history of the NHS when real spending has actually fallen (1950/1–1953/4, –7.3 per cent; 1975/6–1978/9, –0.1 per cent; 1976/7–1978/9, –0.2 per cent), and there have been no six-year periods where this has been the case. This might suggest that real reductions in NHS funding – including our arctic scenario – are unlikely, although low or zero growth may well feel like cuts to the health service”.

In praise of aging
And finally, John Appleby talks significant sense on the received wisdom that the aging populations of the developed world have to equal a crisis. He sensibly points out that "the NHS needs around 1.5% extra real-terms funding every year to cope with the additional healthcare needs arising from all demographic change".

In Simon Stevens’ HSJ column, he recently pointed to research into the "blue zones" (from this book by Dan Buettner), where people are up to three times more likely to live to 100. The book proposes that just 25% of healthy longevity is determined by genes and 75% by lifestyle and everyday choices.