By Dr Patrick Nolan, Chief Economist, Reform.
As has become very apparent in recent days, the medium-term funding outlook for the NHS, with baselines likely to be frozen in real terms for several years from 2011, means the UK health system has to be rethought now. To provide an independent and open forum that generates new ideas in the run-up to the general election, Reform held a conference earlier this week on the future of the health system.
The conference highlighted the need to make better use of limited health resources. The current approach to rationing health resources – where the myth of universal access is undermined by hassle and delay – fails to provide transparency regarding the extent and quality of services to which people are entitled. This lack of transparency is reflected in there being too little initiative given to improving services and managing costs at every level in the NHS.
Greater initiative given to improving services and managing costs would come from expanding the role of private provision and funding of health services in the UK. Private provision of health services is, however, held back by the uneven playing field between the NHS and private providers, with NHS services in supposedly contestable markets benefitting from subsidised public sector pensions and cross subsidies from other NHS services.
Private funding could be expanded through the greater use of user charges. Britain is, for example, virtually unique in having no charge to visit a GP. As the cost of visits fall on the taxpayer, patients have an incentive to visit the doctor for even minor ailments or miss appointments, creating opportunity costs that affect everyone. The greater use of user charges would not only mean revenue would be generated that could be used to fund parts of the health system, but that the costs of providing unnecessary services would be saved.
