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The Maynard Doctrine 6 May 2015: Pre-electoral reflections - is the NHS going to hell in a handcart?

Health economist Professor Alan Maynard wonders what the bloody hell’s going on with electioneering health policy, and is mildly sceptical about the reality of £22 billion efficiency gains

Aneurin Bevan smashed through a myriad of institutional obstacles to create the NHS in 1948. His underlying concern was income protection: ensuring that citizens were not bankrupted by unpredictable life events that required medical care. Bevan’s NHS was to remove the price barrier to use of medical care, removing fear of the financial consequences of ill-health.

Fear of medically-induced bankruptcy remains a major international problem. In the last decade, the Chinese have recognised that their efforts to create a ‘tranquil society’ were failing due to riots, in part occasioned by gross failures in their rural healthcare system. To palliate some 900 million people, they are investing large sums to remove the fear of bankruptcy induced by large medical care bills

Obama came to office in the USA with 46 million.. Americans uninsured for medical care. Against the intense opposition of his Republican opponents, he has legislated and increased insurance cover by 15 million. His opponents continue to seek the destruction of ObamaCare, and in June there is a risk that the Supreme Court will strike down elements of his reform. Some Americans remain addicted to the notion that the threat of medical insolvency is an essential incentive to work.

The noisy but inefficient (as demonstrated by their poor handling of the Ebola crisis) World Health Organisation, together with other international agencies, continue to advocate the extension of public health care to remove the fear of bankruptcy and enhance economic development.

Whither the NHS?
But what are UK policymakers doing? Preparing to send the service to hell in a handcart? Politicians waffle and whinge, demonstrating a poor understanding of the needs of the service, and with some seemingly indifferent to its possible erosion. Are they prepared to undo or erode Bevan’s NHS?

After five years of level real funding, and strict incomes policy, the NHS is facing increasing levels of deficits in both providers and CCGs. Austerity has corrupted labour markets, leading to gross inflation of the costs of agency nurses and a bulge of GPs and consultants who, having accumulated almost indecent pension pots, are now retiring early.

The Five-Year Forward View (AKA the NHS-Stevens plan) estimated a need for an additional £30 billion by 2020. £8 billion is to come from taxation, and the rest to come from increased productivity. The latter is clearly a product of the ingestion of intoxicating liquors: no healthcare system has ever achieved such productivity gains.

All this is obvious, but largely ignored by the buffoons who author election manifestos! The competing politicians offer us drivel.

Mr. Cameroon, after the publication of the Conservative manifesto, has offered an additional £8 billion by 2020. The mischievous fellow indicates neither the timing of this largesse or the way in which it is to be funded. He implies that the ‘economic miracle’ induced by Ossie Osborne’s inefficient and inequitable tax and spend-not policies, will produce abundant additional tax revenues. Let us pray he is right.

The auguries are not good: the ‘economic miracle’ has been built on low wages, static productivity and  a balance of payments deficit that in the past would have led to the collapse of governments. Nowadays, such stark reality is obscured by Murdoch-induced upbeat presentations of dubious facts and self-induced delusions by Cameroon and his cronies

Then there is Mr Milibean and his amusing election manifesto. He plans to produce thousands more doctors, nurses and midwives.

Has Labour captured Sooty, magic wand and all? Medical students take five years to graduate. Then they have to toddle off to training grades and Royal College examinations before we produce GPs and consultants. Nurses have a grossly inequitable free education of three years, and, after graduating, need two or three years to achieve full competence.

So where to get Milibean’s doctors and nurses? A bold government (as rare as hen’s teeth) would require all graduates to work for the NHS for three to five years post-graduation. This might stem the brain drain. Immigration could also assist. But basically, Milibean’s largesse is dependent on the glove puppet Sooty waving his wand and producing a miracle.

Do watch out for chicanery! Increasing acute hospital nurse staffing is a success produced by de-nuding community nursing: discuss.

Given that the politicians are intoxicated by their ignorance of the needs of the NHS, what are we to do?

Surviving political myopia: new funding sources?
Inevitably the unthinking think-tanks of the right wing will roll out the miasma of alternative funding sources. Judging alternative funding sources requires recognition of their comparative efficiency (how much does it cost to generate additional lucre?) and equity (who should be “screwed” for additional loot: the rich? The poor? The ill? The old?).

Income taxation is the cheapest-to-collect to collect tax revenue. Private insurance, ear-marked/hypothecated taxes and prices require expensive bureaucracies.

With regard to equity income, taxation has the benefit that it is progressive, and the rich thereby contribute more.

Private insurance can only be afforded by the more affluent. Subsidising private insurance “to reduce a burden of the NHS” involves, as demonstrated by Australia, the redistribution of resources to the relatively affluent who can afford private insurance. Why subsidise the affluent?

Hypothecated/ear-marked taxes such as National Insurance are proportional taxes i.e. less redistributive than income taxes. Furthermore, they become parts of general taxation and hypothecation disappears. Thus National Insurance is a fiscal illusion, exploiting the fiscal ignorance of citizens. Churchill’s “road fund licence of the 1920s was introduced to fund road building. It soon became part of general tax revenues.

Making citizens pay for their use of medical care is a tax on the ill, which shifts the cost burden from the taxpayer to the private individual.

For those anxious to reduce the size of the public sector, this has attractions. However, as with prescription charges, there would be demands for exceptions. The elderly and those on state benefits would be likely to be exempt. But they are the major users of the healthcare system. Thus revenue yields would be reduced and administrative costs inflated.

All funding systems have costs and benefits. Ideology and value judgements determine choice. For Bevan and me, the preference is taxation. Sadly, Cameroon and Milibean have both “pledged” not to raise taxes. Buffoons!

A top-down re-disorganisation?
An alternative to the funding option is a nice top-down NHS re-disorganisation! A candidate for change is the purchaser-provider split. As Kenneth Clarke has remarked, if it cannot be shown to have worked, maybe it is time to change?

The Welsh, the Scots and the Kiwis ((New Zealand) have abandoned the purchaser-provider split. It maintenance in England is a nice example of a radical experiment which no-one has bothered to evaluate systematically. Its abolition could save billions which could be used to reduce significant deficits.

The Health and Social Care Act 2012 was a gross waste of money. Some wish to abolish it, to create a wholly publicly-provided NHS outside the scope of potentially disrupting EU-North American free trade treaties. The resource consequences of such changes are unclear.

Both Cameroon and Milibean have unconvincing NHS policies. Whether this is due to ignorance or fear of scaring the electorate is unclear.

Whoever ends up in power will inherit a crisis fuelled by the erosion of local government social care; arbitrary inter-sectoral funding transfers (Better Care Fund); and increased demand related to growing multi-morbidity across all population age ranges.

Political rhetoric will be no substitute for funding increases.

The NHS provides the income protection sought by Bevan. It is cheap: primary care costs about £170 per capita, and the full NHS costs circa £2,000 per capita. It is a bargain.

Preserve it with your votes and future advocacy.