Nick White is the medical director of an independent sector hospital and has previously worked as a medical director within the NHS where he still works part time as a Consultant Surgeon.
In his recent report, Ara Darzi has highlighted areas where the NHS needs to improve. The key findings are deterioration in patient access, quality of care, and overall performance (metrics for various forms of waiting times). These are not new observations and the report does not offer solutions to the problems described other than possible directions of travel (rather than detailed policy).
It is clear from the report that the three key priorities for the National Health Service going forward need to improve patient outcomes, then improve patient experience and finally improve staff experience. A way to achieve all of these is by increasing the choice available to patients.
To get a choice we need an increase in capacity, particularly in the three headline areas of capacity constraint: elective waiting lists for diagnosis and treatment, GP appointments (particularly same-day ones), and Emergency Department waiting times.
These three areas of constraint are not separate but interrelated. There are 7.62 million cases, consisting of approximately 6.39 million individual patients, waiting for treatment. These in turn have a knock-on effect on GP appointments where 30 per cent of all requests for GP access are from patients on an elective waiting list with an issue directly related to why they are on that list.
This then creates additional demand in Emergency Departments where a further 30 per cent of patients attending EDs do so because they either cannot get a GP appointment or, as a result of the underlying condition, they are on an NHS waiting list. In addition, these long waits are causing the acuity of the condition they present to EDs to be more severe resulting in longer assessment and admission times.
These Emergency Department delays then have an impact on elective capacity as beds, staff, and other resources are repurposed at short notice to meet emergency demand. This creates a vicious cycle of waits for elective care causing waits for GP appointments which then causes waits in Emergency Departments.
They all have an impact on patient outcomes, patient experience, and staff experience. The way to break this vicious cycle is to focus disproportionally on elective waiting lists and this is why choice and capacity are needed.
Year-on-year increases in funding within the NHS are not providing the increase in capacity to break this cycle. There is a need to step back and take a wider view of the problem. An approach to generating additional elective capacity would be to reintroduce tax relief on medical insurance. This has been discussed before on ConservativeHome.
In 1990 the Conservative Government introduced tax relief for medical insurance premiums for over 60’s. It was opposed by Labour at the time, and in his first budget in 1997 Gordon Brown abolished it. It was in the Conservative Party manifesto for the 2001 general election but has been dropped ever since. It did feature in Reform’s 2024 manifesto.
Recently, the use of the independent sector has surged (initially because of Covid backlogs) and 2023 polling suggests that almost half of people would consider paying privately for healthcare if they needed it. This is despite the huge extra spending on the NHS. Approximately 8 million people in the UK (13 per cent) have health insurance and it is becoming increasingly popular amongst all age groups including younger generations.
The average cost of a comprehensive health insurance policy is £1,250 a year. However, there is considerable variation in cost based on age with policy for a 70 year old being 4 times that of a 20-year-old. This leads to a bimodal distribution with an average policy for someone of working age being £800 and likely to be paid for by an employer whilst the cost for someone over 60 being £1,800 and paid for personally.
Tax relief at 20 per cent on that would cost the taxpayer an average of £250 a year per person. If 15 million people benefitted by £250 a year, that would cost the taxpayer £3.75 billion. However, the individuals taking out that insurance would be putting £18.75 billion into healthcare.
With that money invested into additional capacity, there would be more facilities built, more kit such as MRI scanners bought, and more staff trained. It would almost double the current amount of non-state provision, but would still be dwarfed by the NHS, which is spending 10 times as much, over £180 billion a year.
The NHS budget is mainly used on recurrent funding such as staff salaries with only £10 billion (less than 6 per cent) invested as capital expenditure. This is much lower than other comparable countries that have a more developed mixed model of healthcare provision. The lack of capital investment is detailed in the Darzi report, as is the use of capital for revenue funding.
These capital funds are raided each year as money is moved from capital into recurrent budgets to meet overspending on running costs. At least £1 billion has been siphoned off from the capital budget every year for the last 10 years. That’s £10 billion, if we had invested that money properly, we would have built half of Boris Johnson’s 40 new hospitals by now. With even the best will in the world, the NHS is not going to outperform private sector capital investment in terms of speed or value.
As argued in the Darzi report, as well as previously on ConservativeHome, the NHS does not only need an injection of market discipline but enough capital investment to clear waiting lists. Money is better spent on focused tax relief to incentivise investment rather than tax cuts or year-on-year increases in direct funding which do not improve outcomes.
Restoring tax relief on both company and personal medical insurance would make our system a little bit more like the better-performing healthcare systems around the world that have a more developed model of mixed public and insured funding. It would help people and businesses who can afford to take out insurance; and it would also help those who can’t by taking some load off the NHS.
By widening choice, by reducing the cost, both insured patients and NHS patients will have shorter waiting times without creating a two-tier system of haves and have-nots. This change would make the option affordable for far more people and we could make a real difference to people’s lives. It would be a policy popular across all age groups.
It would more than repay the tax revenue lost with increased investment in hospitals, equipment, and staff. This in turn will help to break the vicious cycle of long waits for planned treatment, GP access, and Emergency Department delays. The three key priorities of improving patient outcomes, patient experience, and staff experience can then start to be delivered.
