Oxford University economist Simon Wren-Lewis explains why the British, despite complaints, remain attached to socialized medicine. Even Conservative politicians find they must support the National Health Service (NHS) or risk alienating voters.
What is perhaps not understood outside the UK is that the British regard the NHS as an institution on an equal par to our monarchy. Not beyond criticism, but seen as absolutely essential to national life. While many aspects of the 1945 post-war social transformation have been swept aside (nationalisation of utilities) or greatly modified, the idea that the health service should be free to all and paid for through taxation is sacrosanct. ….
The NHS embodies a principle that in critical matters involving health, all members of a society should be equal. Overall the UK is not a particularly equal society, and income and wealth inequalities have been growing, but this is one area where there is a strong national consensus that while additional income should mean that you contribute more to a health service, this does not entitle you to receive better treatment.
Do the British pay dearly for this attachment to equality in health provision? If you look at measures of quality or efficiency, the UK does reasonably well, but what does appear consistent is how badly the US performs in terms of efficiency. …. So what seems more likely is that it is the US aversion to government involvement in health provision that is a little delusional. Which of course brings us back to that certain US politician, who not only came up with a plan to try and improve the US health care system, but when the President took it up, he has been kind enough to let the President take all the credit.
Simon Wren-Lewis, “Why the National Health Service played a central part in the Olympic Ceremony“, Mainly Macro, 31 July 2012.
HT Mark Thoma
Government health care is free for all residents in the UK, but no-one is forced to consume it. Private alternatives exist for those who want a higher standard of care and are willing to pay. This socialized system is similar to education systems almost everywhere: government schools are free, and private tuition is available for those willing and able to pay fees.
It is not necessary to go so far as the UK to achieve universal health care. Canada, for example, has socialized health insurance (a single payer), but leaves provision of health care in private hands. Switzerland has achieved universal health care with private provision and private insurance, but this requires mandated purchase of insurance, subsidies for low-income families, and tight government regulation of insurance companies.
The United States is the only advanced country in the world that fails to provide universal health care for all residents. Medicare – government insurance primarily for older US residents – is nearly universal, and works quite well. Medicaid, available to those without access to Medicare, is means-tested and performs very badly. It is extremely difficult for Medicaid patients to find health care providers willing to accept them, because Medicaid rates of reimbursement for services are quite low. This is yet another example of a universal system (Medicare) providing more benefits for the poor than an alternative system (Medicaid) used exclusively by the poor.
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from Andrew G. Biggs:
Larry, You wrote:
“Government health care is free for all residents in the UK, but no-one is forced to consume it. Private alternatives exist for those who want a higher standard of care and are willing to pay. This socialized system is similar to education systems almost everywhere: government schools are free, and private tuition is available for those willing and able to pay fees.”
But doesn’t forcing people to first pay for ‘free’ care then ‘allowing’ them to purchase private care make private care unaffordable for the vast majority of people, just as private schools are unaffordable to most people? Private schools wouldn’t be so unaffordable if you didn’t first have to pay for a private school, regardless of whether you used it. Similarly, wouldn’t it make sense to issue health grants (or whatever) so low-income people could purchase private health insurance? Universal coverage needn’t necessarily mean provision by the government.
Andrew,You wrote:
“Universal coverage needn’t necessarily mean provision by the government.”
On this, we agree. I assume that we also agree that universal coverage is important, both for basic schooling and for basic health care.
First I would like to clarify one point. I wrote that the British NHS “is similar to education systems almost everywhere”, not that it is the same. There are important differences. Patients are not assigned to the NHS hospital or clinic nearest their home, but students everywhere typically are assigned to a government school in the district in which they reside. The NHS, in short, provides more choice than the typical public education system. And, there is (almost) always the option of opting out of the ‘free’ public system, paying full fees to a private provider.
Regarding schooling, I advocate choice, but oppose vouchers when they allow cash top-ups of tuition. The Swedish system is ideal. Government schools have to compete for students with private schools. Private schools can be operated by anyone – religious groups, teachers’ cooperatives, parents’ co-operatives or for-profit corporations – and municipalities are required to finance them on the same per-pupil terms as government schools. There are restrictions, however, the most important being prohibition of tuition fees. Schools, moreover, are not allowed to discriminate by residence, religion, or ability. If there are more applicants than vacant spaces, those first in the queue are admitted first. Students have full choice of schools; schools have no choice of students. This is how free markets should function. I like the Swedish system because I value choice in education, and competition has improved the performance of the entire system – government as well as private schools. I recognize, however, that competition is no guarantee of best outcomes in standardized exams. By this measure, Finland outperforms Sweden and, indeed, nearly all the countries of the world. And Finland has a very old-fashioned system of government schools, with no choice whatsoever. Even opting out of the government system is difficult, for only a few, faith-based private schools are allowed to operate at very small scales.
Regarding health care, the NHS does not provide much choice, but it has the great advantage of being cheap. The British spend only half as much per person on healthcare as the US does, and the results do not seem to be any worse.
I oppose health insurance vouchers for the same reason that I oppose school vouchers: it is a bad system for the poor. If you want to retain private insurers – an expensive option – it is far better to follow the path of Switzerland. The government in Switzerland mandates the purchase of basic insurance policies. The only difference between policies is the amount of the co-pay, and most purchasers choose the zero co-pay option. As many as 30 companies compete, and they are not allowed to discriminate among applicants. If one company ends up with sicker clients, the government transfers funds from other companies to it. Large numbers of poorer residents are subsidized – as many as 70% of the population in some cantons. Supplementary insurance, for services that are not included in the mandated package, can be purchased freely from the same companies that sell the basic policies. The system is complex and expensive, but seems to suit the Swiss. With so much regulation, subsidies, and transfers, it is not a purely private system of insurance.
It would be fairer and more efficient for the Swiss to pay all basic insurance policies out of general government revenue, because an income test is equivalent to an income tax. The implicit tax of an income test falls heaviest on those just above the poverty line. All basic insurance could be funded instead from explicit taxes, paid by everyone, with modest increases in tax rates.