ABSTRACT
Attempting both to finance and supply health-care services through the NHS has given rise to two fundamental problems: endemic underfunding and inadequate competition.
There is widespread attachment to the NHS on ethical grounds because access to medical care is ranked with food, clothing and shelter as one of the essentials which everyone should enjoy in a civilised society, regardless of ability to pay. And most people support the NHS because they believe it guarantees them access to health-care services when they fall ill. It is increasingly being recognised, however, that in practice the NHS is not always there when it is needed. Some say the solution is for the government to give more money to the NHS, but in Chapter 1 I will suggest that this remedy will bring only temporary relief because the NHS has a serious structural flaw, namely, that it lacks any link between demand and budgetary allocation. So long as health services are supplied free at the time of use and financed out of taxes, governments will always find themselves confronting not priced demand but unpriced expectations, uninhibited by contemplation of the other goods and services, like housing and education, which might have been enjoyed instead. [. . .]
If we truly want each citizen to enjoy guaranteed access to a well-defined set of essential health-care services, regardless of their ability to pay, then this objective could be more effectively accomplished if each person had a contract of insurance setting out his or her entitlements. But such a contract can be offered only if the actuarially sound insurance premium has been paid, whether wholly by the patient or, if poor, for him or her by the state. It goes without saying that the government must continue to fund health care for the poor to an acceptable standard. [. . .]
The NHS has also impeded competition. The vast majority of people have only so much disposable income and because they are forced to pay for the monopolistic NHS they are not able to choose alternative provision. The absence of competition encourages bad service, as the government itself recognises; and, no less important, it discourages innovation and diversity.
