The NHS is beyond help! Many in UK policy and political circles would have us believe this: the phrase ‘beyond help’ serving as a euphemism for dismantling the NHS completely, or some other claimed ‘reform’ which amounts to window-dressing whilst the real issues are avoided. Yet, the phrase can carry several meanings. Here, we explore two interpretations of the term. The first involves defending the current system. It is ‘beyond help’ because the NHS already offers the best route to a sustainable, fair and efficient health care system. We will come to my second meaning later.
Many in government would divest themselves of the NHS if they could, such debates having raged for years. As early as1952, the UK Government proposed an enquiry into the cost of the NHS, with a view to dismantling it. This backfired when the subsequent Guillebaud Report of 1956 declared the NHS as good value for money. Thus, it was established that the NHS is not only an expression of our humanity but also the most efficient way to finance health care. Markets fail terribly in this regard. To explain, we need to explore the nature of health care as a ‘commodity’.
Without government intervention in the form of an NHS, insurance markets would develop. But, as illustrated by the US, insurance markets are costly to manage. Estimates consistently show that around 30% of health costs in the US are accounted for by administration, significantly higher than the UK and other countries where the public purse is the dominant source of funding. Additionally, due to the specialist knowledge required of health professionals, consumers cannot regulate the market. Resources are directed by powerful providers which, in market-based systems, leads to inflationary and less-productive practices. This requires countervailing collective power of government to negotiate on behalf of the public as to what care to provide, rates of pay, and capital expenditure.
In health care, with insurance based on risk, the neediest face the highest premiums which many will not be able to afford. If we care about ensuring access for all, the best way to ensure redistribution of resources from healthy (generally wealthier) to less healthy (generally poorer) people is through taxation. Markets cannot do this. The US mitigates this through separate programmes for older and poorer people. But this still leaves many falling between the cracks and, for those who do not, a two-tier system. An added benefit of paying through taxation is that, with everyone locked in together, more vulnerable and needier groups benefit from the drive towards higher standards demanded by the vocal middle class, who might otherwise opt out. Rather unusually in this modern world, the key to paying for a better health care system for all is compulsion, not freedom!
These aspects of market failure explain why, in leading European economies, 75-85% of health costs are funded by the public purse. Despite differences across such countries, it is the similarities that are striking; universal coverage is sought with ‘insurance’ based on collective funding rather than private, individual, market-based transactions. Other economies are gradually moving in this direction, towards the concept of Universal Health Coverage promoted by the World Health Organisation.
Some commentators would have us adopt the social insurance systems of some of our European neighbours. But we already know from experience that continuous health care reform, attempting to instil greater market discipline, has led to little gain at the cost of significant disruption. Claims that social insurance systems ‘do better’ are often based on selective evidence and, even if true, could just as easily be attributed to such systems spending more than we do in the UK. Indeed, the recent LSE-Lancet Commission on the Future of the NHS has shown that modest increases in taxation are the best way to ensure its sustainability going forward.
Our politicians need to find the courage to explain the virtues of a tax-based system to the public. Although NHS spending has increased year-on-year since 2010, it has not kept pace with demographic and technological change. Private medical insurance is now considerably more common than in 2010. This could be a signal that we are in danger of a generation of taxpayers not believing in a collective system as the way to deliver health care. Eventually, this growing constituency of private payers may ask for tax breaks on the mis-informed pretext that they are relieving burdens on the NHS. This would represent a tipping point. As a society, the resulting dual forms of funding would lead us to spend even more in toto on health care. All this would do is ensure quicker access for some over others as the private sector robs the public of the limited medical staff time required to treat those more in need. This leads us to the real policy question and, thus, my second interpretation of the phrase ‘beyond help’. The real policy trade-offs are not around ‘cost of living’ or ‘over-taxation’. They are between accepting a higher burden on the public purse, perhaps in the form of increased taxation, or placing increasing health burdens on those left reliant on a declining and less-accessible NHS. Once over this tipping point, the NHS will indeed be beyond help as there will be no going back to it in its current form.
Cam Donaldson is Emeritus Yunus Chair at Glasgow Caledonian University. He is a renowned health economist and, in 2025, his book Financing Health and Social Care: Bringing Health Economics Back into Public Policy was published in the Palgrave Macmillan Pivot Series. References to claims made in the above material are available in that volume.