I USED TO MEET them in Florrie’s, the student union coffee bar. I was always glad to see my two friends and pass a half an hour or so over a sandwich and a drink. And so, most days during the three years we spent at the LSE together, we would bump into each other and head to a table.
There was one small problem. On our first encounter, I am sure we exchanged names. We must have done, mustn’t we? But for the life of me I couldn’t remember what theirs were. After a few weeks, it simply became too embarrassing to ask. After a year or two, quite by accident, I found out what one of them was called. The identity of the other I do not know to this day. It’s amazing how inventive you can become at addressing people without using their name.
In politics this happens all the time, not with names as much as with policy. You weren’t paying attention when the Yugoslavian civil war began, so you are never quite sure what is going on. It is too humiliating to admit that you don’t who the baddies were in Rwanda (the Hutus), so you avoid expressing an opinion. You feel vaguely as if you must have missed the moment when someone explained the point of the Liberal Democrats.
For the last week, I have had precisely this feeling about health policy. After David Cameron announced that under his leadership the Conservative Party would stick with the NHS, there were any number of people who came forward to say what a disappointing move this was. New thinking, they argued, was necessary. A social insurance scheme, like they have in Europe, is the only way we will be able to pay for all the new drug treatments that are now available. Even Mr Cameron’s defenders simply argued that eschewing such innovative ideas might be regrettable but it was politically necessary.
While all this was being said, I watched the media obsessively, hoping that someone else was, to use Michael Howard’s phrase, thinking what I was thinking. Yet I could see only heads nodding sagely. Nobody seemed to be shouting “rubbish”. I assume I must have missed something.
You see, advocating the replacement of the NHS with an insurance system is not new thinking; social insurance schemes are hardly insurance schemes at all; they don’t have them all over Europe; and there is no logical reason why a social insurance scheme would be able to fund drug treatments that the NHS cannot fund. Oh yes, and Mr Cameron’s defenders are also making the wrong argument — political necessity is not the reason to stick with the NHS. The reason to stick with it is that it is better than the proposed replacements.
Let me start with social insurance systems. Adding the word social makes it sound more acceptable than private insurance, doesn’t it? Yet a scheme is either insurance, which relates contributions to receipt of the service, or it isn’t. Few are prepared seriously to argue that the main users of healthcare — pensioners, children and nursing mothers — should be denied access because they are not contributing. And few want to add even more disincentives into the tax and benefits systems by means-testing payments for health insurance.
As a result, most proposals for so-called social insurance may be social but they are not insurance. They do not exchange contributions for cover. They are simply tax by another name. This is one of the reasons why the systems in France and Germany, often referred to by reformers, are not pure social insurance schemes, they are complicated hybrids involving general tax, private insurance and user payments.
Then there is another argument, this one even more perplexing. Mr Cameron is wrong to rule out alternatives to the NHS because of the cost of new drugs (cue an extraordinary amount of sage nodding). The availability of new treatments does indeed provide a financial challenge, but it is hard to understand why this challenge should be either increased or diminished by the way healthcare funding is organised. If the NHS finds it hard to pay for new remedies, why would an insurance scheme find it easier?
There is one obvious answer to this question, of course — perhaps an insurance scheme would buy everything more cheaply, leaving more money available for the new drugs.
Yet this cannot be the case, since most people accept that the NHS is better at controlling costs than most systems in other countries. The French system, for instance, famously has too many small hospitals and vastly too many dermatologists because it is not really clear who has the responsibility to keep costs down.
This cost issue brings me to my final point: replacing the NHS with an insurance system is not an innovative new idea. It is an old one that has been considered several times and rejected.
In September 1982, for instance, the Central Policy Review Staff presented Margaret Thatcher’s Cabinet with a range of proposals to cut public spending. Abolishing the NHS was among their ideas, which caused a furore when leaked. Yet according to Tessa Blackstone’s and William Plowden’s history of the CPRS: “The paper had made it clear that this was not an option worth pursuing. International comparisons indicated that privatised systems were more expensive than the NHS in resource terms.”
This helped to inform Mrs Thatcher’s view that, as she put it in her memoirs: “I always regarded the NHS and its basic principles as a fixed point in our policies.” The NHS, she wrote, had a “relatively modest unit cost, at least compared to some insurance-based systems”. When the Thatcher Government came to review its policy in 1988, Nigel Lawson quickly came to the view that an insurance system “inevitably results in a massive further escalation in the cost of healthcare”.
Sometimes you have to do what is politic, sometimes what is right regardless of politics. It is never a good idea to embark on a reform that is neither.
daniel.finkelstein@thetimes.co.uk
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