Adam Smith Institute

Here's an idea. Give patients in Britain's state-run National Health Service (NHS) their own healthcare budgets. Then they would be able to buy in the treatment they want, from whatever source they choose, rather than having to put up with the decisions of some distant central bureaucracy. Most patients, especially those with long-term conditions, know what kinds of treatment work best for them, so aren't they best placed to decide their own treatment regime anyway?

You might think this idea is just another rant from the swivel-eyed market zealots of the Adam Smith Institute. But no, it comes straight from Britain's government – a Labour government. Health adviser and clinician Lord Darzi (pictured) wants tens of thousands of patients with diabetes, multiple sclerosis and motor neurone disease to get their own budgets.

I welcome this move. We've long believed that patients, or at least their family doctors, should be in charge of the money that is spent on patients – and that politicians, the Department of Health, and local officials should not be. Then perhaps care might be delivered to serve the needs of patients, rather than for the convenience of bureaucrats. That was where the NHS was heading before it went up a lengthy statist siding under Health Secretary Frank Dobson MP in 1997. So awful was that experience that Labour reformers have been trying to get it back on track ever since. But of course, nobody can admit that Mrs Thatcher's GP-budgets policy was in fact on the right lines.

So, direction-changing as it is, the new initiative is as typically cautious and – well, bureaucratic – as you would expect from a highly centralist administration. It's limited to folk with these very long-term conditions. And they won't get cash to spend, nor anything like it – a new voucher scheme is imagined. (And I can well imagine all the bureaucracy that will go along with that.) I really do wish that our leaders could simply admit that their former Health Secretary made a mistake, apologize for the billions of wasted taxpayers' money that has been thrown at trying to correct it, and agree that patient- or GP-centred budgeting is indeed the best direction of travel for UK healthcare. Don't you?

67. "Some things, such as health, should not be provided for gain."

Why not? If gain will motivate people to supply necessary goods and services, then it can be a useful way of ensuring supply. All goods and services cost something, and the prospect of gain is a good way of encouraging people to produce them. Price, as an indicator, tells them where to direct their activities. Where prices are high, people produce because profits can be made; and in producing, they alleviate the shortage which caused those high prices.

A genuine market in such things as health would put resources where they were needed. Enough people would go into health care to meet the demand for it. It would settle at a level that people were freely prepared to pay for. For decades Britain has spent less per head through its NHS than have its partners with larger private health sectors. People spend more themselves than they will do through taxation.

This is not because the British NHS gives better value. On the contrary, it achieves poorer results overall. Britain has less scanners per 1,000 of population, less renal dialysis units, less kidney transplants, and less of almost every objective measure. It also has higher early death rates on many major illnesses.

Food might be thought even more important, but imagine what the food situation might be if most people were dependent on government supplied food, financed out of taxation, run by the bureaucracy, and available only from approved supply outlets. Even though food is important, the private market is much more capable of guaranteeing us the appropriate supply than would a state-planned system.

If we want a society in which even poor people have adequate healthcare, there is a better way than mass state provision. It is to ensure that quality healthcare is widely available, and that resources are provided to give poorer people access to it.

This week I attended the launch of Saving the Health of the Nation, an excellent short film from the Stockholm Network which looks at the failings of the National Health Service and introduces the idea of Health Savings Accounts as the most promising route for reform. The film features contributions from Stephen Pollard, president of the CNE, James Bartholomew, author of The Welfare State We're In and an ASI welfare fellow, as well as Dr Eamonn Butler, our own director.  

You can see the film online by going to the Stockholm Network video player, then selecting documentaries and clicking on 'Saving the Health of the Nation'.