The NHS is terminally ill—we need a new Healthcare system

Tom won second place in the Adam Smith Institute’s 'Young Writer on Liberty' competition. The theme of the competition was '3 Policy Choices to make the UK a Freer Country', and the following is one of Tom's policy suggestions. 

The NHS is bloated, overweight and obese.  In 2012/13, its annual budget was over £100 billion.  A staggering sum.  For that sort of money we must be getting world-beating healthcare, right?  Well…not quite.  A Bloomberg study put us behind Libya in terms of efficiency!  While our healthcare costs per capita are the 15th highest in the world, our infant mortality rate is only the 30th best.  Life expectancy is no better.  For the huge costs to the taxpayer, the NHS isn’t good enough.

Why is this?  The NHS is increasingly filled with bureaucrats.  2008-9, the management staff numbers increased 12%, while the nurse numbers increased 2%.  Much money is being spent on middle management; not enough on frontline service.  Without the profit motive that exists in private business, the NHS has no incentive to cut costs, or drive efficiency improvements.  Consequently, the NHS budget has spiralled from just over 5% of GDP in 2000 to about 10% now.  A doubling in little more than a decade.  Moreover, the ‘free at point of use’ system is flawed.  Doctors’ valuable time is wasted;  88% said they spend time dealing with minor medical problems that patients could manage themselves.  If healthcare is provided free, of course people will misuse it; that’s how the incentives are aligned.  But is there an alternative?

Singapore’s healthcare system should be adopted immediately.  Bloomberg ranked it second in terms of efficiency; per capita healthcare costs are roughly half ours.  They also manage to deliver superlative healthcare outcomes.  They consistently rank near the top for life expectancy.  It is no surprise that they have the lowest infant mortality rate in the world.  How do they do it?  Healthcare spending is 68% market based.  Individuals control their own health savings account.  For low-income earners, this is topped up so they can afford their healthcare needs.  It also means people aren’t frivolous; they shop around, look for value.  Competition ensures that costs are driven down as healthcare providers fight for customers.  People also have catastrophic medical insurance so nobody is left to die because they couldn’t afford the surgery needed following a horrific accident.

This market-based system maintains fairness - everyone has access to healthcare - drives efficiency and increases consumer choice.  Roughly, the UK could save about £50 billion by increasing efficiency to Singaporean levels.  This is a policy to make society freer, richer and happier.