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Replace the NHS to save lives, says new IEA paper
Reforming the National Health Service into a social health insurance (SHI) system could boost UK health outcomes to European levels.
- There has been a huge shift in public opinion, with Britons now increasingly likely to say the NHS is worse than healthcare systems in other European countries.
- In the last year before Covid, the UK had the second-highest rate of treatable avoidable mortality Western Europe.
- The NHS has consistently ranked poorly in international comparisons for decades.
- In terms of clinical outcomes, other systems tend to outperform the NHS, and they have done so for as long as we have data. This is not simply the result of better funding.
- Countries including the Netherlands, the Czech Republic, Slovakia, and (the former) East Germany have already reformed NHS-type systems into SHI systems.
The new Government has pledged an NHS overhaul, with Prime Minister Sir Keir Starmer stating that “this isn’t just going to be solved by more money, it’s solved by reform”. But the specific model has not yet been clarified. According to new research from the Institute of Economic Affairs, the NHS should be replaced by a European-style social health insurance (SHI) system to boost the UK’s lagging healthcare outcomes.
This comes just a week after a report by Lord Darzi finds that the NHS is in “critical condition”, and Prime Minister’s claim that the health service must “reform or die”.
British public opinion is shifting. According to a YouGov poll, Britons are now increasingly likely to say the NHS is worse than European healthcare systems, with 29% saying it’s worse (+18 since April 2021), and only 20% saying it as better (-22).
As revealed by report author Dr Kristian Niemietz, the NHS performs poorly on almost all parameters. In the last year before Covid, the United Kingdom had the second-highest avoidable mortality rate in Western Europe after Greece (71 per 100,000). Whilst this is high among developed countries, it was still Britain’s lowest-ever recorded rate. Avoidable mortality rates were at 84 per 100,000 in 2010, and 120 per 100,000 in 2001 when the records began.
For all of the common types of cancer, the UK’s survival rates are among the lowest in Western Europe, typically not far ahead of Slovenia and the Czech Republic.
Even prior to the pandemic, the UK had significantly longer waiting times compared to countries like the Netherlands, with waiting times for many procedures about twice as long in the UK.
SHI systems are market based, with private insurers and providers competing for customers. However, markets are regulated to ensure access to healthcare for those with pre-existing medical conditions and governments support those who cannot pay for insurance on a means-tested basis.
As outlined in the report, a transition to an SHI system could improve healthcare outcomes. Introducing competitive pressures and expanding patient choice, as is the case in many European countries, could improve standards and save lives.
Dr Niemietz suggests the following roadmap to an SHI system:
- Turn Integrated Care Boards (ICBs) into non-profit statutory health insurers.
- Replace healthcare funding through taxation with health insurance contributions.
- The National Institute for Health and Care Excellence (NICE) should define a statutory minimum package for health services that all health insurers have to cover.
- Set up a risk-structure compensation scheme.
- Introduce free choice of health insurer to create a health insurance market.
- Turn hospitals and other healthcare providers into freestanding independent companies.
- Remove the cap on the number of medical students and introduce a market-based approach to medical education.
- Phase out national pay scales, and introduce a free medical labour market.
A market-based SHI system would allow for greater experimentation with incentive schemes, and would respond to people’s preferences, with minimal disruption. The reforms suggested in the paper would not shut down one system and build another from scratch, but would allow one type of system to gently morph into another.
Dr Kristian Niemietz, report author and IEA Editorial Director, said:
“Until not even three years ago, the NHS used to be Britain’s most revered sacred cow, and criticising it was the ultimate social taboo. Now, three out of ten people say openly that some of the continental European health systems deliver better-quality healthcare than the NHS does. I have rarely seen a social taboo lose its bite so quickly: there has been a dramatic shift in what people feel they are allowed to say in public.
“But we have now reached a stage where pointing out that the grass is greener on the other side is no longer good enough. What I try to show in this paper is how we can grow some of that greener variety of grass here, on domestic soil.”
Professor Karol Sikora, ex-Director of the World Health Organisation Cancer programme and founding Dean of the University of Buckingham Medical School, said:
“We all know the NHS is in the graveyard. Even the Labour party are saying it’s broken and needs reform. It’s an easy target to criticise but there is nothing in the Darzi report about what reform will look like. Here we have one approach that maintains what Bevan created all those years ago – its universality – but combines it with a business-like efficient approach. Has the current government got the skill to implement it, or will it be cast aside by some sort of fudge? Labour just can’t go on blaming the Tories for the mess Britain is in – we need some action to change policy. Where better to start than the NHS and with this proposal.”
Professor Gwyn Bevan, Emeritus Professor of Policy Analysis at the London School of Economics and Political Science, said:
“Lord Darzi was shocked by what he found in his investigation in the NHS and the state of the nation’s health. This paper by Kristian Niemietz offers the radical solution to that crisis of changing to a social health insurance system with choice between competing insurers. Such a system was implemented over 20 years in the Netherlands with agreement across key stakeholders. Even if that change were desirable, would England’s political system ever maintain a consistent direction for NHS reform for 20 years?”
Professor Wynand van de Ven, Emeritus Professor of Health Insurance at the Erasmus School of Health Policy & Management (ESHPM), said:
“This is a great report that proposes a promising way to improve the incentives for efficiency and the responsiveness to consumer preferences within the NHS. Fifteen years ago, Professor Gwyn Bevan (LSE) and I came up with similar ideas. We outlined how a consumer choice of Integrated Care Board, as proposed in this IEA-report, could result in a convergence of the English NHS and the Dutch healthcare model that is based on regulated competition among purchasers of care and providers of care.”
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Notes to Editors
Read a full copy of The Denationalisation of Healthcare.
In 2019, the UK had the second-highest avoidable mortality rate (71 per 100,000) in Western Europe. This was the lowest avoidable mortality rates have ever been in the UK. In 2010, it was 84 per 100,000. In 2001, when the records began, it was 120 per 100,000.
The NHS consistently ranks poorly in international comparisons. The Commonwealth Fund – whose studies praise the NHS system more than any others – has ranked the UK second-to-last on ‘healthcare outcomes’ since 2007.
The UK has high mortality rates for heart attacks and strokes compared to other Western European nations. The mortality rate for haemorrhagic strokes in the UK is the second highest in Western Europe, and for ischemic strokes, it is the third highest.
In 2016, the Institute of Economic Affairs published Universal Healthcare without the NHS by Dr Kristian Niemietz, to which this paper is a sequel.
About the Author
Dr Kristian Niemietz is the IEA’s Editorial Director and Head of Political Economy. He is the author of the books A New Understanding of Poverty (2011), Redefining the Poverty Debate (2012), Universal Healthcare Without the NHS (2016), Socialism: The Failed Idea That Never Dies (2019) and Imperial Measurement: A Cost-Benefit Analysis of Western Colonialism (2024).
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
