Andrew Lilico: Which bits of NHS reform really matter?

The debate over the NHS reform bill is becoming fraught, and we are risking losing even the modest advances made late in the Blair period.  Some, such as the BMA, argue that the health regulator Monitor should promote collaboration, not competition, whilst others seem particularly upset that supplying to the NHS might become subject to EU competition rules.  Some claim there must be more competition on price, others that all competition must be on quality, others that there must be no competition at all.  Some want to preserve PCTs as prime commissioners; some want all clinical staff instead of just GPs; others want a greater role for local councillors.

I believe it is important here to distinguish between key matters of principle and technical issues of efficient and effective implementation.  Though of course we ought to have views on the technical issues, and they will be of great practical significance, we should be much more willing to compromise on the technical questions than on the points of principle.

In my view, the key issues of principle in this context (not the key issues concerning NHS reform overall, but the key issues in this context) are these:

• The Coalition Agreement states (p26): "We will give every patient the power to choose any healthcare provider that meets NHS standards, within NHS prices. This includes independent, voluntary and community sector providers."  There must be no resiling from this.  Any company, from any sector - private profit-making, charitable, even international - should be a potential supplier of services to patients, under an NHS funding umbrella, provided that it meets NHS standards and NHS prices.
• Suppliers to the NHS must compete on price and on quality, subject to meeting quality thresholds.  The concept that there is something bad about competition should simply be rejected and dismissed as the antediluvian nonsense that it is.  Of course, subject to meeting quality requirements, firms should be able to compete on price!  We want more NHS output for the same cost.  Price competition doesn't mean healthcare being shoddy or unsafe - that's the point of having quality thresholds!
• Supply to the NHS should be subject to UK and EU competition rules.  Why should one firm be any more entitled to be a monopolist, or exploit a dominant position, or enter into cartels or other anti-competitive agreements, or engage in predatory pricing or margin squeezes, or similar anti-competitive practice in the health sector than in any other sector?  The very notion only needs to be stated clearly to be seen as absurd.

Matters that are more up for negotiation seem to me to include:

• Who purchases?  I see arguments for its being GPs rather than PCTs or foundation hospitals.  But if there are technical objections, or proposals for how PCT commissioning could be improved, I see little purpose in dying in a ditch on this point.  One should certainly not compromise on any of the three key issues of principle in order to secure GP as opposed to another model of purchasing.
• Who regulates competition?  Should it be Monitor, or the OFT, or some other body?  There are good reasons for it to be Monitor, but it's perfectly plausible that some other arrangement could work nearly as well or even better.
• Should there be more price-capping?  Various medicines have for some time been subject to price-caps (e.g. certain generics).  There could be more extensive price-capping at present in many areas.  In principle, if competition assessments concluded that certain suppliers had natural market power positions unlikely to be eliminated quickly by competition, one could even imagine Monitor serving the role of economic regulator in the style of Ofwat or the CAA.  But it seems to me that one should be quite relaxed, as a matter of principle, in this area provided that price-capping did not go so far that it undermined genuine and effective competition and new entry.

These areas should provide ample room for negotiation.  We can even offer the Lib Dems some cosmetic "victories" on the three practicalities if they will offer us a quid pro quo in terms of compromising on reform of our relationship with the ECHR and the European Union.  But on the points of principle we must not move at all, lest we give up even that little that Blair gained.