Should we Privatise the NHS?

Backbencher October 21, 2013 4

The Great British privatisation train rolls on. Thatcher’s economic revolution continues to dominate the headlines as Royal Mail emerges as the latest example of popular capitalism. Royal Mail is, by all accounts, the most successful privatisation to date. But there’s an elephant in the room. Britain’s beleaguered National Health Service remains as one of the only stalwarts of the nationalisation era still in public hands. It all begs the question: is it time to privatise our NHS?

DoH_department_of_health_sign__R

Well yes, and no. Of course in a world of choice in almost anything, to fund a health system that many people despise harks back to a collectivist post-war era where working together was the only way to rebuild the nation. As the world changes so must we, and by continuing to cling to the NHS we are only clinging to an archaic emblem of a more romanticised period of British life. But then again, it could be worse. Compare healthcare costs around the world and we immediately see Britain’s situation is nowhere near as bad as it could be.

In 2010, according to the Organisation for Economic Co-operation and Development (OECD), British expenditure on healthcare was £127.44bn, or £2,124 per capita. This ranks it as 15th highest in the world, and according to the World Health Organisation (WHO) 2000 World Health Report, providing 18th best quality. This is compared to expenditure per capita of £5,094 in the USA, £3,269 in Switzerland and £2,684 in Germany. However the 2000 WHO report placed these countries at 38th, 20th and 25th respectively.

The reason the NHS is able to deliver quality for relatively low cost is its ability to buy in bulk. Whilst the US has the highest expenditure on healthcare per capita, because private companies only represent at most a few million clients, their ability to persuade providers is weakened. The NHS buys all their, say, fake hips from one producer. The decision is made on quality and value for money, and there exists a price war between producers of fake hips to get to supply every fake hip used in NHS hospitals. For example a replacement hip in the USA costs around $40,000, in contrast to £3,000 in the UK .This has resulted in the ridiculous situation whereby the US spends more taxpayer money per capita on healthcare, for Medicare and Medicaid, than the UK. When the free market is done right, it delivers far better than anything that can be provided by the state. But compared to the US, our universal healthcare seems to be more efficient.

And yet the theory says otherwise. As has been seen endlessly in the past, a company motivated by profit becomes less wasteful and more productive. As efficiency increases so we see changes in technology, innovative thinking becomes the norm rather than the exception, and levels of quality previously unseen come to the fore. This is all as a result of competition. The beauty of giving power to the consumer rather than the producer is that when freedom ensues, everyone benefits. As consumers begin to decide between which healthcare plan and hospital they feel would provide them with the best value for money, healthcare producers are forced to improve or face losing customers. The NHS is not faced with this incentive, and as a result even if we’re appalled by disgraces like the Mid Staffs scandal the vast majority of us have no way of choosing a different healthcare provider, and as a result, everyone suffers. Surely then privatisation is the way?

NHS protest (Guardian)

It’s already been happening, of sorts. The Private Finance Initiative (PFI) is a scheme the left love to hate, painting it as privatisation by the back door, but the National Audit Office found it provided good value for money overall, and if we’re the ones footing the bill this is surely the news we want to hear. PFI is simple: creating “public–private partnerships” (PPPs) by funding public infrastructure projects with private capital. But it has its detractors. The Treasury Select Committee remarked that ‘PFI should be brought on balance sheet’, which would considerably increase the real costs of healthcare in this country, and show that the NHS perhaps isn’t as good value for money as previously thought. If so, the argument to privatise the NHS significantly regains some credence.

However, no matter how strong the arguments for privatising the NHS, I argue it shouldn’t and won’t happen. If everything were to be defined in perfect economic terms, privatising the NHS would be a no-brainer, in fact it would be scandalous that the embrace of the completely free market hadn’t already happened. But there are social costs of privatisation that would be too great to bear if the NHS were dismantled, and the outrage from the left would make The Guardian unreadable for months. It’s a nice idea, but one inevitably consigned to the dustbin of history.

Elliot Burns

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  • Russell Thomas

    Commoditise healthcare as is the case in the United States and you will end up with a very inefficient system.of provision. Academic research from the New England Journal of Medicine estimates that 31% of healthcare expenditure in the US is devoted to admin costs, way in excess of any other developed country healthcare system,
    the great majority of which provide universal coverage.
    Remember that about 50 million Americans are without health insurance cover and close to 20 million are underinsured.
    Be careful what you wish for.

  • Implant

    The nhs does not buy all fake hips for one producer. Far from it. There has always been massive inefficiencies in the way the nhs procures from its suppliers. In the last 5 years we have seen steps to improve procurement in many trusts but there are very few examples of the nhs acting as a sole customer at a national level. We do pay far less for hip implants in the uk than most other markets including the USA but it’s got nothing to do with the nhs acting as a national single large customer. Hard to pinpoint why but my guess is it has something to do with the fact that the nhs can’t pass the costs on to customers or insurance companies and other countries can. It’s not that we get them cheap, it’s other countries massively over pay and the barriers to entry in medical devices are high. Any cheaper supplier that is venture capital backed will sell out to an existing major supplier before taking significant market share globally.

  • Mihran

    Yes, it should be privatised.
    If it’s as good as everyone makes it out to be (including the bulk-buying aspect), then it’ll outcompete everything else.
    This is different to simply contracting it out. I should not be forced to pay for something if I don’t want to buy it.

    • Guest

      What about those who can’t afford to pay for healthcare of their own volition?

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