Let’s celebrate the NHS’s 70th birthday by burying some myths about it

Why does our society provide health services collectively rather than privately? Why don’t we all simply, as individuals, buy what we need (medicines, consultations, treatments, operations, etc) as and when we need them, rather than funding it all through the tax system? 

What makes buying healthcare so different from buying groceries or flights abroad? We don’t have a national supermarket service, or a national holiday service. So why do we have a national health service? Why not let the market work its magic, balancing supply and demand, sending price signals, driving efficiencies and forcing up quality? 

Unless you’re a market fundamentalist or a libertarian ideologue, the answers to these questions probably seem obvious. Yet they are nevertheless worth asking as the NHS turns 70 this week, since the answers can help us to appreciate the reasons for its foundation, to grasp the ways in which it falls short and also to see what we need to do to put the health service on a stable footing for the future.

First the economics. Health costs can be large and are often random. We don’t know when we might get sick and how much we might need to pay for treatment. Those features make the overwhelming case for some kind of insurance system, where such financial risks are socially pooled.

This doesn’t need to be done through a fully taxpayer-funded, publicly-owned, centralised system like the NHS. Several European countries have social insurance systems, where employees and employees make contributions and a diverse array of specialist independent health companies and hospitals supply the care in return for funds from the communal pot.

But if you want everyone to have access to healthcare, regardless of ability to pay, there does need to be a large element of taxpayer subsidy and a compulsion to participate in an insurance scheme. Leave it to “the market” and the market will fail, as the American experience shows. The US has a vast private health insurance infrastructure, but those features of compulsion and redistribution are lacking or incomplete, with the result that some 30 million working age Americans go without the health coverage they need.

It was to end this kind of grotesque inequality in access to healthcare that the NHS was founded by Labour in 1948. There are very good reasons for pride in that historic achievement. Seventy years ago it was not outlandish to suggest that the NHS was, in the words of its founder Nye Bevan, the “envy of the world”.

But is that true today? A report from various UK think tanks, including the King’s Fund and the Institute for Fiscal Studies, last week highlighted evidence that the NHS is lagging behind other systems on a number of health outcome indicators, ranging from cancer survival rates, to managing those with pulmonary disease to post-heart attack mortality.

A major cross-country study last year of amenable mortality – measuring the rate at which people die of conditions that could feasibly have been treated – showed the UK performing poorly relative to several other developed countries. Critics are probably right to say that paeans from politicians to the glories of the NHS unhelpfully distract us from this sobering reality. The important question is whether more money for the health service will improve outcomes, or whether there’s some kind of structural impediment.

We do spend less on health as a proportion of GDP than the likes of Germany, France, Japan and Sweden – countries that have tend to have better outcomes. It’s not unreasonable to hypothesise that we could get better results if we spent more, particularly on equipment such as scanners. The last eight years of gross underfunding for the health service relative to the demands being placed on it by an ageing population certainly provides powerful evidence that if we don’t significantly increase its resources, outcomes will deteriorate further.

It’s often asserted by right-wing newspapers and libertarian pressure groups that social insurance systems are much more efficient than the centralised “bureaucratic” NHS, with the implication that we can wring out better results without spending more if we would only commission more private providers, or impose radical structural reforms.

Yet, as last week’s think tank report also crisply spelled out, the NHS is actually very efficient relative to other systems, including those that have adopted the social insurance model. Despite the perennial complaints about managers, the NHS spends less on administration than comparable systems. It also prescribes more generic medicines, keeping the overall drugs bill down.

There is certainly scope for the NHS to learn from other successful health systems around the world. It would be the height of arrogance to argue otherwise – and would fly in the face of the evidence.

Incremental structural reform proposals deserve a hearing. Yet, at the same time, a wonderful birthday present for the NHS would be if we (finally) buried the beguiling and ideologically-inspired myth that we can have a health service fit for the 21 century, without collectively paying more in tax to fund it.

#NHS #NyeBevan #socialinsurance

Interfering in the eating habits of the poor might get results – but is it morally right?

Which came first, the chicken shop or the desire for deep-fried chicken? New research by Public Health England (PHE) last week showed that of the 50,000 or so fast food outlets in England, just under half are to be found in the poorest 30 per cent of wards.

With obesity and diabetes exerting a growing strain on the health service, it’s naturally a public policy goal to encourage people, particularly children, to have healthier diets. To this end, PHE sees an obvious solution: curb the proliferation of unhealthy eating options in low-income neighbourhoods.

“It’s not surprising some children find it difficult to resist the lure of fast-food outlets when many neighbourhoods are saturated with them,” argues Dr Alison Tedstone, the quango’s chief nutritionist.

“Local authorities have the power to help shape our environment and support people in making healthier choices. They need to question whether these fast food hotspots are compatible with their work to help families and young children live healthier lives.”

But could this be a classic reverse-causation error? Do poor people often eat unhealthily because they are surrounded by fast food shops? Or do they eat unhealthily because they are poor (and thus attract fast food outlets)?

George Orwell famously described this supposed tendency in the 1930s. “The less money you have, the less inclined you feel to spend it on wholesome food,” he wrote in The Road to Wigan Pier. “A millionaire may enjoy breakfasting off orange juice and Ryvita biscuits; an unemployed man doesn’t …

When you are unemployed, which is to say when you are underfed, harassed, bored, and miserable, you don’t want to eat dull wholesome food. You want something a little bit ‘tasty’. There is always some cheaply pleasant thing to tempt you.”

And there is some more recent evidence that the stress of poverty leads people to behave in a short-sighted way, particularly in relation to their own health.

A related critique is that attacking the pleasures of the poor is the peak of hypocritical, middle class condescension. Jamie Oliver’s epic healthy eating crusade has drawn criticism from some on this basis.

Even attempts to discourage smoking have drawn complaints that they risk being a form of class-based discrimination. “What enjoyment does a 21-year-old single mother of three living in a council sink estate get?” asked the then health secretary John Reid in 2004. “The only enjoyment sometimes they have is to have a cigarette.”

The fact that such interventions often seem to “work” does not really settle the debate.

The ban on smoking in pubs, which Reid was objecting to 14 years ago, was introduced by Tony Blair’s government in 2007. There was a spike in demand for NHS stop-smoking services after its introduction.

Survey results show 14 per cent of ex-smokers credit the ban with helping them to quit. And 20 per cent of smokers say it has helped them to cut down on their consumption.

Recent research from the Institute for Fiscal Studies on the likely effects of the tax on high-sugar soft drinks also suggests it is a “well targeted” intervention if the goal is to discourage consumption among the young.

In truth there’s something slightly specious about the “middle class nanny state” objections, given that those who make the complaints are often thoroughly middle class themselves. One could argue that it’s not them and their children who have to run a gauntlet of fast food shops when they step out of their front door. And is it not just as patronising of a cabinet minister like John Reid to suggest the “only enjoyment” available to a single mother is, or can ever be, a cigarette? And in relation to the correlation-causation conundrum on unhealthy eating among the less well-off, it’s notable that anti-nanny state libertarians tend not to be proponents of more fiscal redistribution or higher public spending.

Yet it would be wrong to brush off the tradeoffs. However successful recent interventions have been, there has been collateral damage as well.

The smoking bans seems to have helped speed the decline of pubs, arguably reducing the social bonds of communities. The IFS research suggests middle age builders, whose demand for high-sugar soft drinks is insensitive to price, will be made financially worse off by the soda tax.

And one does not need to be a rabid libertarian to worry about the danger of excessive state interference in people’s free choices.

In the end, how an intervention is done matters as much as what is done. Balancing welfare considerations is inherently a political choice. Decisions cannot and should not be left to technocrats and health experts like Public Health England.

Elected politicians need to take clear ownership of the decisions, as the Labour government did on the smoking ban and as the Conservatives, to their credit, have on the soda tax.

This is especially important as politicians, unlike technocrats, are in a position to take action to influence all those other relevant factors, from the availability of local economic opportunities, to the funding of local community institutions, to the raw reality of how much money people have in their pockets.

#fastfood #georgeorwell #health #publichealthengland

Taxes, growth and right-wing ideology

No one would ever accuse Jacob Rees-Mogg of being up to date. But that applies as much to the Tory backbencher’s politics as his Edwardian dress sense.

Polling evidence suggests the British public are unambiguously ready, for the first time in a decade, to pay more tax to fund better public services. The most recent British Social Attitudes survey shows a larger proportion of the public now favour an increase in taxes to pay for better services than the proportion who feel that taxes and spending should be kept where they are.

A specific YouGov poll on the NHS suggested that 66 per cent of the public would be prepared to pay more in income tax to ease the pressure on health. And that even apparently includes a majority of Conservative voters. But Rees-Mogg seemed unaware of all that evidence yesterday, as he preached from the traditional right-wing gospel of tax cuts.

“This country is as highly taxed as a percentage of GDP as it has been since the early 1970s, late 1960s,” he told LBC. “I don’t think the Conservative party is here to increase taxes. Philip Hammond seems to think otherwise but he hasn’t yet presented a budget and he may find there is not a lot of support for tax increases.”

And then came some economic theorising.

“I think you make money available to the NHS by growing the economy and I think you grow the economy by lower tax rates. I think you stifle the economy by higher tax rates.”

Let’s unpack this. Is Rees-Mogg right that taxes are now very high by historical standards? Not really. The share of national income collected in tax receipts will be around 37 per cent this year. Back in 1981 when a 12-year-old Rees-Mogg was threatening to sue the Today programme the tax share was up at 41 per cent.

A larger share of national income was also being taken in the “early 1970s, late 1960s”.

It’s true that the tax share is considerably higher today than the trough of 31 per cent it scraped in 1994 under John Major. But that was a previous time when public services were almost universally considered to be grossly underfunded. Right-wingers like Rees-Mogg are fond of claiming that taxes can be unsustainably high. But they can also be unsustainably low.

The tax take today as a share of GDP is higher than it was a decade ago, before the financial crisis. But that’s largely driven by demographic factors. Health spending is up as the age profile of the population has matured and more people inevitably require care. State pension pay outs have also increased as the pensioner population has grown. The rest of the public sector has suffered an enormous squeeze under the coalition and now the Conservatives.

What about boosting growth through lower taxes? Well, we have some evidence to refer to here. The main rate of corporation tax has been slashed from 28 per cent to 19 per cent over the past eight years. Yet the recovery of business investment has been abnormally weak relative to the wake of other recessions.

The income tax threshold has also been steadily raised. While consumer spending has been reasonably robust, it has certainly not been sufficient to deliver strong wage or GDP per capita growth. This has been the weakest recovery from a recession on modern record.

As for growing the economy in future, there is not a single credible economic forecast showing that Brexit – of which Rees-Mogg is a fervent supporter – will do anything but damage the UK economy. Slower growth will hit the public finances, making less money available from tax receipts for the NHS, not more.

Finally, do higher tax rates stifle growth? The latest data from the International Monetary Fund shows that of 39 advanced economies 25 had higher tax shares than the UK in 2017, among them France (54 per cent), Norway (54 per cent), Finland (52 per cent), Sweden (49 per cent), Germany (45 per cent) and Canada (39 per cent).

Did these relatively high tax countries grow far more slowly than the UK since the millennium? Not at all.

And average annual GDP growth rates in Canada (2 per cent) and Sweden (2.2 per cent) have actually been higher than in the UK (1.7 per cent). Serious economists who have looked at even larger historical datasets find no clear association between lower taxes and higher growth.

There are many reasons why a country can fail to deliver for its people economically. Excessive taxation is probably one of them. But the obsession with which the likes of Rees-Mogg make the case for lower taxes – lower at all costs – reflects more about their own ideological preferences than anything in the available economic evidence.

#JacobReesMogg #taxation