ABSTRACT
The UK’s National Health Service (NHS) was founded fifty years ago as a central element of the welfare state arising from the post-war Beveridge reforms. The NHS was to provide universal, high-quality medical care, free at the point of consumption. General taxation was, and remains, the source of finance for the NHS. Arguably, it is this method of financing that is both the strength and weakness of the UK’s health service. Commentators continually refer to the low percentage of GNP expended on health services in the UK relative to other industrialized states, particularly the USA. This is viewed as evidence of the comparative efficiency of both the NHS in providing health care, and its financial arrangements. Moreover, the NHS is popularly judged to be equitable in the provision of treatment and facilities, although this perception is subject to considered challenges (see, for example, Goodin and Le Grand 1987; Klein 1995). Simultaneously, taxation-based finance represents a weakness as it entails obvious consumption inefficiencies for the neoclassical economist, and relies on the continued positive disposition of taxpayers towards service users in the context of accelerating costs and fiscal parsimony. It is the combination of increased demand, the projected income elasticity of health care, and significant technological cost inflation that has led to issues of funding arrangements, and popularized discussions on a funding crisis in the NHS.
