As previously described, the public healthcare system is the pride of Britain. Among other things, the pride results from the absence of insurance for healthcare. After all, healthcare insurance is representative of the American system: a synonym for profit-making on the patient and a lack of care for the poorer parts of society. In short, for a system that should be rejected outright.
So at first it was impossible for me to make my wife, a GP, understand that (practically) all citizens of Germany can go to the doctor without having to fear financial ruin. Only after long discussions and comparisons was I able to convince her that Germany’s public healthcare insurance system was very different to the American one. And in our discussions we both learned about the disadvantages of the British system.
One crucial shortcoming is the lower level of protection against political interference. In Germany, public health insurance funds are financed by a special levy. The amount is regulated by law. In the UK, there is no separate funding. A large part of the public healthcare budget comes from general tax revenues. (And about 20 per cent from National Insurance).
A NHS GP Surgery in London
The public budget is roughly divided into two parts. The first is defined as ‘certain necessities’, which include social benefits or public sector pensions. The second part is more actively managed by the ministries, such as spending on defence or education, or the costs for the healthcare system.
In the 2018-19 fiscal year, £313 billion was budgeted for the actively managed part (I'm sticking to the numbers before the pandemic, as the Corona years had special circumstances). By far the largest sub-budget was that for healthcare at £123.3 billion (primarily for England), followed by Education at £62.5 billion [1].
If one wants to increase spending on the NHS, either taxes have to be raised, a step that politicians will hardly propose if they want to be successful at the next election. Or the budgets of the other departments have to be cut. Given the size of the NHS budget, the cuts would have to be excessive to have any effect at all. (The third possibility is to increase tax revenues through economic growth, for example via immigration).
If a government wants to increase other budgets, the NHS budget is the first candidate to be cut, due to its sheer size. A few billion less in the healthcare budget are hardly noticeable, right?
As a result, government spending on the NHS is under constant attack, whether from other departments or to keep the overall budget down. Party political influence can be seen very well in the development of the budget over time. Under Labour, the budget grew by over 6 per cent a year (in real terms) in the 2000s [2]. Then the Conservatives took over. From 2010-2015, the annual increase was 0.84 per cent, after which a few tenths of a per cent were added on top [3]. Despite the budget difficulties in the aftermath of the financial crisis, the restraint is remarkable. (The number of people in the UK is rising, especially the number of old people, and therefore the need for healthcare.)
But wait, isn't £123.3 billion an awful lot of money? Isn't that enough? I dare not answer the question, at least not directly. But we can take a look at how British spending compares to German spending.
Unfortunately, a comparison is not easy; the systems are not only very different, but complicated. The first question is how much money overall flows into the British systems in the first place. After all, the £123.3 billion mentioned is mainly for England.
I found a summary of all expenditure on the website of the Office of National Statistics: Total public spending on healthcare in 2018 was £166.7 billion [4]. This corresponds to just under £2,510 per citizen. In the same year, the revenue of public healthcare insurers in Germany amounted to 222.1 billion €, 2,670 € per citizen [5]. Not a big difference.
But the comparison is flawed. In Germany, there are other public insurances that provide healthcare services, such as long-term care insurance. The benefits included there are already included in the UK budget mentioned above. However, not completely. This is because some services that are covered by the public system in Germany have to be paid for privately in the UK.
Let us therefore look at the total expenditure of both countries on healthcare, including the budgets of all public sources and private insurances, as well as other expenditure. In the UK, this results in an amount of £214.4 billion in 2018, approximately £3,230 per citizen. Of this, 22 per cent, £47.6 billion, comes from non-public sources [6].
In Germany, the total budget amounts to 390.6 billion €, about 4,710 € per citizen. Of this, 26 per cent, 101.7 billion €, comes from private channels [7]. (In both countries, about 10 per cent of the population have private insurance [8] [9]). Total expenditure in Germany is thus significantly higher, both in absolute terms and per capita, every year.
But there is more. In the UK, private and public infrastructure are much more separate. In Germany, privately insured patients are accommodated in single rooms, are more likely to be treated by a senior doctor or receive an appointment more quickly. But in principle they visit the same hospitals and general practitioners as those with a public insurance. The common infrastructure is financed with money from both types of insurance. In the UK, there are many more facilities exclusively for the privately insured. In comparison, the NHS hardly receives any money from the private sector.
It is therefore not surprising that the British NHS are less well equipped than the German system. In relation to the number of citizens, the UK has 30 percent fewer doctors, 40 percent fewer nurses, almost 70 percent fewer beds, over 75 percent fewer CTs, and almost 80 percent fewer MRI scanners [10].
The British NHS are not only struggling with a comparatively small budget, they are considered inefficient. Unsurprising, given their history. As a result, the NHS has been tinkered with for decades. Below is a brief look at the English NHS.
Initially, there was only one organisation. Following the socialist ideals that formed the welfare state, hospitals and almost all other institutions were part of it. Strategic decisions were made in Westminster.
But the decision-makers had no idea of the conditions on the ground. At some point, it was discovered that life expectancy in some English regions was significantly lower than in others, with increased infant mortality, but they did not know why. As a consequence, responsibility was devolved to the regions.
The Thatcher government created an internal market that still exists today. Hospitals and other institutions act as independent service providers that are paid a flat rate for services rendered and finance their budgets with the revenues. Within a region, the local hospitals compete for the funds provided. The competition should come with cost savings.
The new millennium came with a series of reforms. 2001 saw the introduction of Primary Care Trusts (PCTs), independent regional umbrella organisations [11]. Equipped with funds from the Department of Health, they purchased services from hospitals, were supposed to directly take care of other services, such as nursing, and set up programmes to increase local health. The trusts were governed by a board of directors, at least some of whom were local doctors and nurses.
Their list of responsibilities was to increase. The number of PCTs, on the other hand, declined, dropping from 303 to 152 within a few years [11].
The trusts were suffering in a number of areas, though, and the system was to be improved in 2008 with the World Class Commissioning Programme. However, it only survived for two years.
In 2013, PCTs were replaced by Clinical Commissioning Groups (CCGs) and Public Health England (PHE). CCGs are associations of doctors and nurses in a region which, like PCTs, commission other agencies to provide services [11].
Public Health England was a new organisation of the Department of Health and Social Care. Composed of experts, it supported and oversaw the healthcare system nationally and played a central role in major undertakings such as disease control.
In 2019, the healthcare system was thus structured as follows: As part of the government, the Department of Health and Social Care is responsible for the national budget and sets the structure and rough procedures. This includes Public Health England. NHS England is a separate organisation under whose overall supervision numerous other units provide healthcare services. Clinical Commissioning Groups organise the distribution of funds in the region. NHS Foundation Trusts, like hospitals, compete for the CCGs' money and do the actual work.
At least I think this was the structure. It is so complicated and there are so many changes. It is hard to keep track.
And of course the described structure doesn't exist any more: in August 2020, in the wake of the Corona pandemic, it was announced that Public Health England would merge with NHS Test and Trace into the lnstitute for Health Protection. In 2021, the reform was completed, whereby the new institution, the UK Health Security Agency, was given a different name than originally planned. In addition, some of the PHE's tasks were not taken over. Some of them went to other new institutions, such as the Office for Health Protection, which soon after received a new name too: Office for Health Improvement and Disparities. And in 2022, a new Health and Care Act was passed, which included further fundamental reforms, such as the replacement of CCGs by Integrated Care Systems...
When I try to talk to the doctors among our friends about the organisation of the NHS, they just roll their eyes. None of them knows exactly which organisation has which responsibility at any given time. Basically, they have given up trying to understand the system. As one of our friends put it: Before he gets into the subject, he wants to understand his pension entitlements first. Those change every few years, too.
The separation of the English NHS into a multitude of quasi-independent organisations also made it possible to open the system to the free market. Today, public and private providers are competing for NHS funds. The latter with an interest in profit.
This does not have to be a problem. In Germany many hospitals are run by private companies. They tend to operate more efficiently and economically than their public counterparts because they are inherently more cost-conscious. And larger operators save money through synergy effects. As long as the economic pursuit of the companies does not harm the patients, why not. Liberalism can be wonderful when reason and morality are taken into account.
But we are in Britain. Too many decision makers lack the competence to do their job. Whatever the system, it is more likely to fail than elsewhere. (And next to money, other arguments all too often pale in comparison).
There is a fear among many Britons that privatisation will go on until profit oriented companies are present everywhere in the system. Will healthcare then become less secure? Companies will certainly pay close attention to which services promise the greatest profit. Will public providers be left with the unprofitable rest? Will they have to give up? Or will the politicians be blackmailed? The private providers could demand higher prices.
Is free healthcare even at stake? If the companies are present everywhere in the system, the government could start to no longer cover certain services. They would then have to be paid for privately. In the original NHS, entirely public and fully integrated, such a step would have been impossible. The separate private market would simply have lacked the capacity and infrastructure to care for the entire population.
Virtually every responsible politician of the last decades swore that with them there would be no privatisation of the English NHS. And yet every reform has improved the conditions for private takeovers.
In 2019, £3.6 billion worth of NHS services were provided by private companies. A comparatively small amount when measured against the total budget. But the total represents an 89 per cent increase compared to 2015 [12].
The NHS, the pride of Britain, is gradually being eroded. (At least in England. The Scottish NHS still consists of a single organisation). No wonder banners against Brexit and in favour of the NHS were present at the 2019 anti-Trump demonstration. Many fear the Americans will insist on further opening the NHS to American companies as part of a trade deal.
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[9] Share of Privately Insured People in Germany