Could private top-up insurance help fund the NHS?
BMJ 2016; 355 doi: https://doi.org/10.1136/bmj.i5424 (Published 12 October 2016) Cite this as: BMJ 2016;355:i5424All rapid responses
Rapid responses are electronic comments to the editor. They enable our users to debate issues raised in articles published on bmj.com. A rapid response is first posted online. If you need the URL (web address) of an individual response, simply click on the response headline and copy the URL from the browser window. A proportion of responses will, after editing, be published online and in the print journal as letters, which are indexed in PubMed. Rapid responses are not indexed in PubMed and they are not journal articles. The BMJ reserves the right to remove responses which are being wilfully misrepresented as published articles or when it is brought to our attention that a response spreads misinformation.
From March 2022, the word limit for rapid responses will be 600 words not including references and author details. We will no longer post responses that exceed this limit.
The word limit for letters selected from posted responses remains 300 words.
But why, as Ian Harmer asks (1), should “those over a relatively high income threshold – say, £60,000 p.a . – [pay] a graduated contribution per NHS usage event?” Why should the sick pay for things that – mostly – are beyond their control? Why introduce fresh bureaucracy to assess each NHS usage event? Would that be each prescription? Would an operation be an event, or would the initial consultation and the preoperative assessment be separate?
Why not just increase tax for those earning more? Harmer admits his scheme would be complex but those complexities could be used to calculate a hypothecated increase in direct income tax, rather than working out charges for each ill patient.
Sadly, these discussions are the inevitable consequence of not being prepared, as a society, to pay what we need for health care.
Competing interests: No competing interests
"Free at the point of delivery" is understandably cherished by the vast majority - but why must it be available universally, regardless of both personal and national economic circumstances? Surely, if the well-off were required to contribute somewhat to their own personal care, it would in no way conflict with the original underlying principle of the NHS: that no citizen be denied essential healthcare for want of personal means.
What if those over a relatively high income threshold – say, £60,000 p.a . – paid a graduated contribution per NHS usage event? This would be broadly similar in principle to the French scheme's use of both means testing and various contribution rates by category of illness - but applicable only to the relatively well off. Its progressive nature could be further enhanced by making the contribution rates set at progressively higher levels per income band (above the threshold). The Australians also target only the well off, albeit with a very different contribution scheme.
Contribution payments, where due, would be invoiced at point-of-delivery (as effectively in NHS dentistry and pharmacies at present). Payment would be made either directly (e.g. by credit card for a relatively small amount such as a GP or other consultation) or alternatively for collection retrospectively through the HMRC Income Tax collection mechanism - to be decided at the time by the patient.
A patient's contributory status would be established prior to invoicing and payment, as indicated via the patient's NI or NHS number (ideally, through a portal to a HMRC-controlled subsystem). The patient's status would be recorded as either exempt or a specific contriutory income band (similar to "Basic Rate" and "Higher Rate" Income Tax bands, but with different thresholds). For simplicity, additional higher rate contributions might best default to collection in arrears by HMRC, thus allowing the basic rate only to the charged at the point of delivery (comparably to deduction at source of basic rate tax on savings interest payments).
Most importantly, the “tax contributions” raised would be hypothecated - in the extreme: an individual taxpayer's total annual contribution could be itemised on their PAYE coding notices &/or annual Tax Calculation. Strictly speaking, these contributions would not be income tax but a service charge. Use of the tax system for rating and collection would actually be for administrative efficiency and presentation purposes.
However, whilst presented as predominantly tax-based, the scheme in no way precludes supplementary use of private insurance. Use or otherwise of PMI could be entirely a personal choice and claim settlement would be direct between insurer and patient. (This might help avoid inevitable accusations of "privatisation of the NHS by the back door".) However, existing private health insurers would clearly be well placed to supplement the basic scheme with optional “NHS Top-Up” insurance schemes, French style. (The prerequisite “insurable risk” is potential treatment cost, not “tax liability”.)
Key elements for implementation already exist: means testing within HMRC, common use of NI number by HMRC and Social Services/NHS (assuming integration of the latter two is already in hand), electronic networking within both the NHS (e.g. GPs to pharmacies) and HMRC (for PAYE coding for employer payrolls). This suggests the scheme could be piloted - or at least prototyped, with only notional payments and funds changing hands - without too much cost (relative to the problem) or generating too much angst in the media.
Clearly even this modest proposal would be difficult to swing politically. It would inevitably be regarded by many as an incursion on the “free for all” mantra. Also, beyond any prototype, it would undoubtedly incur very significant roll-out and running costs. Most of all, it would inevitably be viewed – quite correctly – as the thin end of the wedge, ripe for extension deeper in contribution rates and/or wider in social penetration. Fiscal drag alone would clearly widen the net, albeit hopelessly too slowly to address the scale of the dramatically increasing funding gap.
To avoid unacceptable electoral damage, any initial implementation would necessarily have to be very modest in terms of both social penetration and personal impact. Thus, applicability thresholds would have to be set high and contribution rates low. Consequently, total contributions collected would likely prove fairly insignificant relative to the scale of the total funding gap. However, the scheme could, at least, establish both the principle and the infrastructure for extension both in penetration and contribution rates.
Finally, there’s nothing inherent in this scheme to stop any future government, of whatever political hue, adjusting the initial contribution parameters for any desired level of progression and yield. So, might it - just - offer a relatively painless way forward for our dithering politicians to begin to address this hitherto intractable problem?
Competing interests: No competing interests
Whilst David Wrigley makes a compelling ethical and moral case, the financial case for a universal health service, free at the point of use is largely absent from his argument. Goodman (1) eloquently sets out an important arm of the financial case namely that to introduce top up there has to be an additional administrative cost which given the breadth and depth of health provision can only mean introducing inefficiency to the system. This is something that has already been seen in the UK in the context of social care.
Going beyond this, I believe there is a compelling argument to apply Keynesian principles to health and take advantage of the current economic climate of low interest rates to invest in future economic productivity. Both the coalition that preceded the current administration and the labour government before that recognised this principle and explicitly invested in services for high morbidity, high mortality conditions that affected the economic productivity of young adults. The accompanying economic analysis by McCrone et al is compelling and advocates an “invest to save” approach to health (2). Given that this involves delivery of effective treatment and secondary prevention to a hard to reach demographic group, top up charges would render such an approach far less effective.
Finally, the most efficient way of spending money on health is on primary prevention and to do this requires thinking outside the notion of health, social care, welfare and education as being distinct entities. The Marmot review (3) makes this case, arguing for investment in children through provision of good quality housing, meaningful access to education and elimination of poverty to bring about improved long term health outcomes. He demonstrates that these are provisions that are unequally distributed and have become more so under the last administration. I would argue that there are no signs that the present administration is likely to reverse this. Top up charges would simply entrench a shift towards treatment rather than prevention and would do nothing to meaningfully alter public health thereby introducing further inefficiency over the long term.
1. http://www.bmj.com/content/355/bmj.i5424/rr-4
2. http://www.kingsfund.org.uk/publications/paying-price
3. http://www.instituteofhealthequity.org/projects/fair-society-healthy-liv...
Competing interests: No competing interests
The NHS is close to financial collapse. Riddled with PFI bills at extortionate rates, and with demand rising far higher than funding, a frank discussion is needed on how to fund the NHS moving forwards. The founding principle of the NHS is that it is free at the point of use and, for me, this must remain the case.
How we fund this is of course where the difficulty lies. Public support for the NHS has always been high. I believe that if the public were given a choice between paying for a private insurance 'top-up', or a dedicated 1% tax on earnings over a particular threshold, most would think the latter is a far better option. Public finances are stretched, and we have been told there is going to be no extra funding from government. So called efficiency savings, many of which have had large up-front costs attached, have been exhausted, demand will continue to rise and there will be no more funding. Now is the time for a brave move, or else we could lose the founding principle of the NHS all together.
Competing interests: No competing interests
If we start from Alan Maynard [1] and accept that “a single payer, tax financed health care system like the NHS offers greater efficiency and equity” then the sensible solution is to increase tax until it pays for the NHS. It really is that simple.
Let us say that the current spend is £X, and the extra required to ensure ‘free at the point of need’ is £y, then the most efficient way is to increase tax to provide £y, and then you have £(X + y). Yes, you could find that money from some form of top-up or insurance, but that is not so efficient. The NHS then costs £(X + y + p), where p is the extra cost of administering some sort of parallel funding. Inevitably, the less well off will then get worse health care.
Steven Ford is right [2]: “Tax is not a penalty on ‘hard working families’ it is their investment in an orderly, inclusive, civil society.” Unfortunately, too many of our newspapers and too many of the present government regard tax as a ‘burden’, and too much tax is unpaid. For the NHS to survive as it is will require changes in attitude that seem unlikely.
1 http://www.bmj.com/content/355/bmj.i5424/rr-0
2 http://www.bmj.com/content/355/bmj.i5424/rr-2
Competing interests: No competing interests
Dear Author,
This is a topic of much heated discussion and debate in all spheres of education in the country. As a medical student studying in England I believe that our voices should be heard in such a discussion. We are the future of the health care in the country and will have to live by these decision made. When engaging with medical students here it is clear to see that one of the main driving forces behind this career choice is to work in the world-renowned NHS which has been free at the point of service since its inception. I believe this this unique feature we have in this country shouldn't be eroded away because other countries struggle to implement such a system. We must do our upmost as healthcare professionals to make the politicians and decision aware of our feelings towards privatisation of our NHS. I would also add that the NHS attracts students from all walks of life due to its simplistic message that essentially says if you are unwell, we will help you - and there is something uniquely beautiful about this.
Regarding the lack of funding for the NHS, its of no real surprise that our healthcare is actually one of the worst funded in Europe. The United Kingdom spends a smaller proportion of its GDP on health care than countries such as Portugal, France, the Netherlands and even Greece [1]. Furthermore the issues that arise through privatisation are many, it is not a miracle pill that will make our healthcare system automatically better. One concern I have is a shift in attitude that would disseminate throughout all the staff working in healthcare making them driven by money and no longer good-will. This would have a direct impact on patients but also the medical students who are looked after by doctors who currently aren't paid more to do so.
Lastly, where would one draw the line in privatisation of our healthcare service? I believe that this avenue is a slippery slope that should be avoided.
References
1. http://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/health-care-spend...
Competing interests: No competing interests
Unfortunately the NHS becomes more messy by the day with increasing variability of service and whereas the cornerstone of the NHS is equity of provision, the existing service fails to deliver this because the inevitable and necessary rationing is not applied in an objective and fair way across the board.
The NHS will not be what might be considered adequately financed because it is a political football (albeit a very large one) with players trying to keep the ball on the ‘free at the point of use’ pitch of fixed size but it spends more and more time off. In reality the service has probably not been so since soon after its inception.
Already many users of NHS services quite effectively ‘top up’ by paying for private care which provides an imbalance and not only effectively discriminates against those who cannot, for whatever reason, pay but also serves to alleviate much pressure to reform as such users are the ones who could exert the most influence.
Properly organised and arranged ‘top-up’ and other fees would increase the fairness of any health service rationing allowing an equivalent range of treatment to all users.
So, how to square the circle? Services can still be considered in three groupings which would need to be properly defined (1). First, core services of high quality free at the point of use to be provided as part of the tax-funded NHS. Second, cost effective services outside core should still be open equally to all by being paid for in proportion to disposable/taxable income (2). Third, services at the margins, perhaps wanted but not needed, would be down to the individual to fund in full. Identifying core services and setting a relative value to the others would be the task of a body (such as exist elsewhere) set up for the purpose.
Beyond the core service everyone would be expected to make some contribution, even those ‘on benefits’ as this ensures community cohesion.
Money must not be wasted in administration, the cost of collecting any top-up fees must be strictly controlled.
The level of top-up for high earners will approach that of private care presently so they will most probably continue to opt out.
1. Top-up fairly according to means. 21 May 2008.
http://www.bmj.com/cgi/eletters/336/7653/1105
2. Lake APJ. Patients should pay a percentage of income. BMA News Review 2000; January: 30.
Competing interests: No competing interests
There's a variety of options. The questions are are they better and, if so, how and why?
The proximate reason for the decline in funding and the consequent decline in healthcare provision in the UK is government policy and ideological rigidity. The NHS is being induced to fail as a deliberate act of policy - the minister is a co-author of a book advocating NHS privatisation. There is nothing inherently wrong with the basic mechanism of universal healthcare that is tax funded - to the contrary, it is the only solution that a civilised progressive society would adopt. Tax is not a penalty on' hard working families' it is their investment in an orderly, inclusive, civil society.
Multiplying the funding sources might yield additional revenue but it would definitely add to the complexity and cost.
When seeking to reform a complex system the first step should always be to add simplicity. Applying this principal to the taxation system, by eliminating all scope for avoidance, would yield a much higher level of investment in our society and allow all 'hard working families' to benefit.
Yours sincerely
Steve Ford
Competing interests: No competing interests
Health care in France is funded primarily by Social Insurance. For serious conditions and for the disadvantaged the costs of care are fully reimbursed. For minor conditions the more affluent face patient charges for part of the cost. Most French citizens meet these charges with private insurance.
French Social Insurance, like UK National Insurance, is a proportional tax used to fund health care on an annual pay as you go basis. It exploits fiscal illusion created by mischievous use of the word “insurance”.
Requiring French patients to pay charges for relatively minor ailments was supposed to reduce patient utilisation. There is no evidence it does this largely because 95 percent users buy private insurance.
The fragmented French funding system creates complex bureaucracy and high administrative costs. It privatises part of the cost of care and offers poorer macro expenditure control compared to a single payment system such as the NHS.
As ever a single payer, tax financed health care system like the NHS offers greater efficiency and equity.
Competing interests: No competing interests
Re: Could private top-up insurance help fund the NHS?
re those who advocate an Australian System:
it is two tier. If you pay you access excellent (sometimes overserviced) care
If you don't have $ then things are different. There is a lack of outpatient clinics for most specialities, there is no / little community Psychiatry provision. Death rates for some aboriginal communities are comparable to the third world. Meanwhile the private insurance companies profits are >$500 Million/ company / year.
The BMJ should report with hard evidence.
Competing interests: No competing interests