The NHS funding gap: Muddling through?

The news today has been filled with discussion of the imminent cash crisis in the NHS. Reports suggest that by next year there will be a black hole of £2bn. But, muddling through and finding a way of coping with this immediate shortfall ignores the fundamental problems.

The crisis has encouraged people – including, today a hospital nurse from London – to put forward again proposals for GPs to charge for appointments as a means of plugging the gap. This may sound controversial to many. But, it is by no means without historical precedent. Back in the 1950s, with the backdrop of the Korean War, governments introduced charges for prescriptions (Labour under Atlee), and dental treatment and spectacles (Conservatives under Churchill). Over time, services that were previously free were shunted into the social care pay-as-you-go bracket, such as parts of continuing healthcare; whilst the closure of the backwards in hospitals had the same effect.

Charging for GP appointments would get us pretty much what we are looking for to fill the immediate £2bn gap in 2015. Advocates suggest that such a move would also act as a deterrent on unnecessary appointments and serve to manage demand for health services (although arguably we might be better to manage demand by discouraging people from living unhealthy lives rather than discouraging them from seeing their GP when they have developed a health problem). This might horrify those who hold onto the principle that NHS services should be (almost absolutely) free at the point of use. But, it could hardly be described as revolutionary given the form of the NHS.

The question, then, is whether we should be revolutionary or muddle through.

In one sense, the very perception that the NHS is free at the point of use, when in actual fact it has a heritage of charging for certain items and for rationing previously free services, suggests that the NHS could ride out more funding crises. We could declassify some more NHS services; we could introduce charging for GPs or an annual NHS subscription. Politicians might even be able to get away with it. We could muddle through for plenty of years yet.

Yet, this would be to ignore two colossal issues. First, the funding challenge in the NHS is getting worse not better over the next decade. Efficiencies achieved thus far are not inconsiderable. But, they have relied heavily on constraining the wage bill as part of the Government’s broader deficit reduction plan. We won’t be able to continue repeating this exercise year or on year (in fact, the history of pay settlements in health don’t offer great cause for hope that the apparent savings in the wage bill won’t unravel in the years ahead). Technological and medical advances may create opportunities for efficiencies – but the past implies they will offer just as much opportunity for spending more.

Muddling through would also overlook the incoherence across health and social care. As the Oldham Commission and others have argued, commissioning health and social care separately drives huge inefficiencies – keeping people in expensive hospital beds way longer than needs be and allowing many more into hospital in the first place than necessary. The same applies on the funding side: what is the logic behind funding social care privately and health services publicly? For individuals with more than £23,000 in assets, it heralds the bizarre scenario within which they pay for support at home or in a residential home, but get free accommodation in hospital. An ageing population and growth in the number of people with long-term conditions means even more people will find themselves at this illogical interface between the two services. It is perhaps ironic, therefore, that an immediate cause of the current funding crisis appears to be the Government’s attempt to shift £2bn of resources from health services into social care services through the Better Care Fund (which seeks to promote integration).

For these two reasons, there is a compelling case to be radical. But, that’s not to suggest we won’t muddle through one last time.

The SMF is currently undertaking a project addressing these issues, ‘Future scenarios for health and social care’, which will be published in the summer. For more information on this project contact Nigel Keohane.


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