Health systems financing

Allocating financing to healthcare is fairest through general taxation (hence the UK’s strong scores in international comparisons on this criterion), but the risk is of healthcare being systemically underfunded (as it has been through most of the history of the NHS), or, especially in an era of political austerity, of need becoming detached from what is politically expedient to allocate. General taxation funding, however, appears the lesser of the evils available as this is likely to lead to a fairer healthcare service.

Changes to the provision of services.

The purchaser/provider split has been a massive source of waste and inefficiency to no good end. The Health select committee was highly critical of it in 2010, and if we compared the costs of running the system off and on since 1990 with the slight benefits that it has led to, we would be forced to the conclusion that it fails on both quality and inequality grounds. Evidence from the LSE that ‘competition saves lives’ has been contested by myself and others and again, does not compare costs and benefits.

We are now able to plan for our health needs more than ever before, and face fundamental challenges to the way we deliver care, needing to move away from hospitals to community-based services, and to bring together health and social care budgets. Competition gets in the way of this, preventing planning and fragmenting budgets. There seems to be no conflict between quality and inequality here – it is genuinely the case that there is little to be gained from the use of competition in health services, and significant gains in terms of quality and inequalities through the careful planning of services across health and social care.

The integration of services

If we are to integrate health and social care, there is little alternative but for the NHS to move into local government. Other healthcare systems in Europe have shown this is perfectly viable, and it also represents a significant opportunity to reinvigorate local democracy – if people are given the opportunity to have a say in the running of service which affects nearly everyone, surely they will take that chance. Budgets for care need to be moved away from the largely unaccountable clinical commissioning groups and placed in local government, where long-term strategic decisions can be made about planning across health and social care, and far greater local democratic debate opened up about what kind of services it is we want, and how they will be paid for.

This kind of debate will be politically difficult – it will mean services differ from one area to the next. But this will be combined with a genuine democratic mandate rather than the seemingly-arbitrary differences that seem to often exist at present. Such choices, however, would not lead to an increase in inequalities, but more to reflect local service needs, provided they are offered on the basis of clinical evidence and not used to fund treatments that appear to have little or no actual value (such as homeopathy, for example).

Budgets and purchasing arrangements

As the general taxation system is rather unique, it is difficult to draw evidence from other healthcare systems to produce comparisons. However, if we are to have a healthcare system that reflects local need, it suggests that central healthcare funding needs to be allocated according a formula that reflects local healthcare needs. The question then is whether local government should have the ability to top this up through locally-raised taxes. This fits with the local democracy argument made above, but will lead to richer areas being able to potentially spend more on health services. As such, in terms of quality this is likely to lead to an improvement (for those areas that impose and can afford local taxes) but to an increase in inequality. This leads us to a choice – the logic of local democracy would seem to suggest that services be allowed to differ (and so potentially cause inequality), but local government provides the greatest opportunity for the better integration of health and social care.

In conclusion

The evidence and argument above suggests that the NHS is best paid for through general taxation but organised in local government, and based on planning rather than competition. This combines a fairness in funding, with the opportunity to reinvigorate local democracy and flexibility in dealing with health inequalities where they are best addressed – locally.

Both comments and trackbacks are currently closed.


  1. jenw17 says:

    This is a ridiculous idea, and I find it even more ridiculous coming from someone in Durham, although Durham University has always existed in a more rarified atmosphere to the rest of County Durham.
    Just look at the county figures for early deaths produced last month and you will see that health inequality already exists if you compare even Yorkshire to Durham. This idea can only exaccerbate the problem.
    Local funding from central government for the North East in any area , housing, transport,jobs, is lower for the North East compared to the South. Central government hasn’t even thought fit to provide finance to dual the A1 up to Edinburgh. Do we really want to add the NHS to that?
    The drugs for diabetics cost no less in Durham compared to Cambridge or York. But Ian Greener thinks it okay to have less money provided in poor areas.

    1. Ian Greener says:

      I’m sorry Jen, but I don’t understand what you mean here. I’m not suggesting that we fund health services locally (so I say that we should keep health services funded from general taxation), but that we run them locally (which would give us greater scope to deal with the health inequalities you rightly point out as existing). If we had a fair formula for funding healthcare based on wellbeing, poorer areas would get more resources and I think that would be entirely justified.

Comments are closed.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 827 other subscribers.

Follow us on Twitter