NHS crisis a key concern for mutual sector

What will happen to the National Health Service? I could be asking about the potential closure of all general hospitals, the crippling cost of paying for the Private...

What will happen to the National Health Service? I could be asking about the potential closure of all general hospitals, the crippling cost of paying for the Private Finance Initiative, whether foundation trusts are viable or democratic, or even, indeed, about the role of GPs. But my question actually applies to an even more fundamental issue — can the NHS survive as a tax-funded service?

This should be a matter of vital concern to the co-operative and mutual movement. The alternative to the NHS is a system of social insurance, in which the main insurers are mutual organisations owned by their members — as BUPA (the British United Provident Association) is.

There is undoubtedly a financial crisis gripping the NHS. Despite a 40 per cent increase in funds, the NHS is still unable to cope with the demands placed on it. In part this reflects the expectation that waiting lists and waiting times should be eliminated. 

It also comes from demographic changes, with more elderly people who live longer. It also stems from some bizarre decisions taken by former Health Secretary John Reid that were generous to GPs and consultants and have proved very costly, without achieving much (if anything) in terms of productivity. 

But one of the key challenges is the cost of drugs — particularly cancer drugs. A course of drugs, such as breast cancer drug Herceptin, can cost £20,000 to £30,000 per patient. 

Tarceva, which can extend the life of a lung cancer patient, costs a similar amount, but has not been approved for use in England or Wales, but has been approved in Scotland.

Newspapers are increasingly full of stories about the personal tragedies of families using up their savings or selling their homes to enable someone to live a bit longer. But the public policy challenge — which is in effect being dealt with in England and Wales by rationing overseen by the National Institute of Health and Clinical Excellence and in Scotland by the less strict Scottish Medicines Consortium — is whether it can be justified to spend a fortune on drugs that extend a patient’s life for a few months, rather than actually cure them. 

It is not a decision I would want to take. The simple answer would be to authorise the drugs and it is, of course, the decision I would want for my children. But it is an approach that would simply bankrupt the NHS, with nearly 160,000 cancer referrals per quarter in England alone.

What needs to be stressed is that the financial crisis provoked by the availability and cost of cancer drugs does not only affect the NHS. It is equally afflicting private sector insurers in the United States (where healthcare policy is permanently in crisis), where there is also the beginnings of a debate on the possible rationing of care and drugs — even for those who are fully insured. Similarly, there are signs that private insurers in the UK are taking a more hard-nosed line on claims for cancer-related illnesses — both under private medical insurance and critical illness policies.

Europe’s social insurers are similarly affected and both France and Germany have taken steps to make schemes more financially viable. Problems emerged at the end of the last decade when the increasing drugs costs and demographic trends coincided with an economic downturn. As unemployment reduced contributions by both employers and employees, so social insurance schemes became increasingly vulnerable. 

In Germany, it is reported that the impact has been felt less on drug treatment and more on care for the elderly. The BMJ has quoted a health professor as saying that Germans may get the best doctors and hospitals in treating them for cancer, “but you had better not become ill with dementia, chronic heart or lung disease”. Indeed, a debate has now opened in the country about whether social insurance should cease to pay for treatments that make conditions for the elderly more bearable — such as hip replacements.

In France, when in government the socialists cut the social insurance contributions by employers in order to reduce the disincentives to employment. Gradually, France is moving to a more-tax based system. Denmark is, like France, regarded as one of the best healthcare systems in the world, but, like the NHS, is fully tax-funded.

Other concerns have been raised about the viability of German and French social insurance schemes — whether there remains the political will to support them. Governments there speak strongly of the need to maintain the ‘social market’ and to resist ‘Anglo-Saxon capitalism’, but the Left has lost elections in both countries — not least because the electorate resisted their analysis of how to restructure the two countries’ welfare states. 

Some political commentators conclude that the principle of social insurance and the social market — that of solidarity — has been eroded by the force of global capitalism, a more competitive culture and increased migration.

Another warning sign can be seen in the Irish Republic. Until recently, BUPA was the main private sector insurer in a system that is based around insurance and minimum state health provision. To make the market fair, BUPA was required by the Government to make ‘equalisation’ contributions to its state-backed competitor — recognising that people insured by BUPA were likely to be lower risk. BUPA has now abandoned its position in the market, selling out to private insurer Quinn.

In the UK, too, BUPA is changing market position — it recently sold 25 hospitals and is concentrating more on residential care for the elderly. Again, this highlights where the risks and rewards are situated.

In other words, the financial problem is universal. Social insurance may, or may not, be preferable to the NHS, but the NHS’s financial crisis is not in itself evidence one way or another. “Health systems throughout the world are ‘in crisis’,” wrote Professor Rodney Lowe last year, in the History & Policy journal. “There is no perfect system.”

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