Bean counting and the NHS

Richard Cookson, 11 July 2014

I was recently questioned about the future of the NHS, during a live debate on the BBC Radio 4 programme “the moral maze”, on 9 July 2014.  One of the panelists took me to task for being a “bean counter”.  I got side-tracked by this somewhat less-than-flattering characterisation of my professional role as a health economist, and so only managed to get across three of the six points I had planned to make.  For what they are worth, this blog sets out all six points.  And, as an added bonus, it then concludes by explaining why I am proud to be a “bean counter”.

This blog sets out personal ethical views on a number of controversial matters of social value judgement.  That is what the BBC programme makers asked me to do, and I hope my professional colleagues will not “tut tut” too loudly when they see me doing it.  Professional economists are supposed to help decision makers and stakeholders think through the implications of a range of alternative value judgements, rather than to impose their own particular personal or professional value judgements.   However, this blog merely voices my own value judgements – it does not impose them on anyone.

Point number one is that the NHS performs rather well compared with other health systems across the world.  It is relatively cheap, relatively good, and very fair.  The UK currently spends about 9% of national income on health care, just under the OECD average, compared with 18% in the US.  People in the UK are on average healthier than those in the US – even rich people with access to the best available health care in the US.  And the UK regularly comes top of Commonwealth Fund surveys of fairness in high income health systems.  The UK NHS is widely regarded as the fairest health system in the world, with the possible exception of Cuba.

Point number two is that financial strain on the NHS will get worse in decades to come – potentially much worse.  This is due to a fundamental clash between health economics and tax politics.   The tax politics is obvious.  Voters do not like high taxes, so there is a limit to how far taxes can be raised, even to pay for something as popular as health care.  The health economics is less obvious, but surprisingly simple when you think about it.  As countries get richer, they spend a higher percentage of national income on health care.  There is a simple reason for this.  As we get richer, which is more valuable – a third car, yet more electronic gadgets, or an extra year of life?  (I am here paraphrasing Hall and Jones in their 2007 paper in Quarterly Journal of Economics, which predicts that health spending in the US will rise to 30% of national income by 2050).  In the technical economic jargon, health care is a “superior” or “luxury” good.  Do not be misled by this jargon – it does not mean that health care is an unimportant frippery.  Quite the opposite.  Effective health care that extends life and improves quality of life is much more important than fripperies.  That is why rich people want to spend such a large share of their incomes on it.

Point three is that my own preferred solution to this problem – and here you will notice that personal ethical opinions are coming thick and fast – is gradually to ration NHS care more explicitly and extensively, within whatever budget the electorate are willing to vote for.  That would enable the preservation of a tax-funded national health service that continues to provide a fairly comprehensive package of cost-effective health services to all citizens, that is nearly free at the point of delivery.  (The NHS has never been 100% comprehensive or 100% free at the point of delivery).  The rationing should be done through a transparent deliberative process, and based on a range of ethical principles, including cost-effectiveness, need, and compassion.  Chief among these principles, however, should be cost-effectiveness – the principle that scarce NHS resources should be used to do as much good as possible in terms of extending people’s lives and improving their quality of life.

Point four is that more extensive rationing is a better and fairer solution to the problem of preserving the NHS than more extensive user charges.  User charges should not be imposed on cost-effective forms of health care, such as GP visits.  Charges for GP visits deter people – especially poorer people – from seeking preventive and diagnostic care.  Without effective prevention and diagnosis, health problems progress to become more harmful to the patient and more costly to the NHS.  If health care is cost-effective it should be provided free on the NHS; and otherwise not.  People can then pay for non-cost-effective care themselves, either out of pocket or via “top up” private health insurance.  The slogan “all necessary care should be free” should be re-interpreted as the slogan “all cost-effective care should be free”.

Point five is that fervent ideological debates about “competition” and “choice” and “markets” and “privatisation” are largely red herrings.  What matters is that the NHS provides a fairly comprehensive range of cost-effective care to all citizens, so that everyone receives the care they need at a cost they can afford.  Who owns or manages health care provider organisations does not matter directly in and of itself.  Ownership and management may matter indirectly, of course – but only insofar as they impact upon the cost, quality and social distribution of health care.  The direction and size of such impacts in different contexts is a factual matter, to be settled in the court of evidence and experience, rather than a matter for fervent ideological debate.

Point six is that a more extensively rationed NHS can still preserve the founding principles of the NHS.  On the delivery side, it can preserve the principle of “equality of access” to all necessary health care – where “necessary” means “cost-effective”.  And on the financing side, continued tax funding continues to preserves the principle of “solidarity”, that the strong should help the weak – the rich should help the poor, the young should help the old, and the healthy should help the sick.  Finally, the NHS also preserves the benefit of financial risk protection.  As was stated in the public information leaflet sent to all UK citizens at the founding of the NHS in 1948, one of the main benefits of the NHS is that “it will spare your family from money worries in time of ill health”.

In conclusion, the best way to preserve the NHS is to engage in more explicit and extensive rationing.  This in turn will require more of what my “moral maze” inquisitor called “bean counting”.  More evidence will be needed to inform a suitably transparent and deliberative rationing process.  In particular, more evidence will be needed about the impacts of different NHS services on cost, length and quality of life, patient experience, need, compassion and dignity, and other ethically important outcomes and processes.  This form of “bean counting” is not an ignoble exercise.  The “beans” in question here are people’s lives.  People’s lives matter, and if seeking to improve the length and quality of people’s lives makes me a “bean counter” then I am proud to be one.


2 thoughts on “Bean counting and the NHS

  1. Panos Papanikolaou

    Just a little comment regarding point 1: The UK public healthcare system is compared with its USA counterpart and thus it performs better than that. However, what are the reasons that the USA public healthcare system is used for comparison, and not other healthcare system, as there are substantial philosophical and, thus structural, differences between the UK public healthcare and its USA counterpart. Perhaps, how well does the UK public-care system performs when compared with some of the key EU member-states. For instance, what is the evidence in favour of / against superior performance of the UK public health-care system when juxtaposed with its Swedish, German, Dutch and French systems?
    This is because, in my opinion, the public healthcare systems in the aforesaid EU-states have more in common, in terms of structural and philosophical principles, with the UK than otherwise.
    Last and not least important, I hope that you will find this of some interest.
    Thank you for offering the opportunity to leave a note.
    Kind regards
    Panos Papanikolaou


    1. richardcookson1 Post author

      Hi Panos – thanks for taking the time to comment, and sorry for my delayed response due to summer hols. Quite agree other European countries are closer comparators to the UK, and many of them perform well on both quality and equity. The OECD do the best comparisons of this kind, and their “Health at a Glance” is well worth a look (or, indeed, a glance!) A limitation though is that the current OECD performance data are all at national level; the next step is to disaggregate to sub-national geographical and organisational levels to paint more fine-grained pictures: am involved in a European project called ECHO that is linking hospital data between 6 European countries to do just that. Its hard work to do “cross walks” between the different national coding systems, but do-able… next step to try and update and expand this embryonic data infrastructure so that OECD and others can do international performance benchmarking using more powerful micro-level cross country data. Best wishes, Richard



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