Imagine a parallel universe where the National Health Service had never been created. What would healthcare in Britain look like today?
Would we have to live in constant fear of being bankrupted by medical bills? Would access to healthcare be determined by ability to pay? Would we have luxury healthcare for the rich, and ‘Ryanair healthcare’ for the poor? Would we have a system of ‘Wild West medicine’, in which quacks and charlatans try to push their miracle cures on a hapless public?
The answer is almost certainly a resounding no: it would be nothing like that. But we often seem to imagine that healthcare is a binary choice between the system we currently have, and some horrible dystopia. The result is that we unduly eulogise the NHS, and hold it to unrealistically low standards.
If we want to see a plausible counterfactual for how healthcare in Britain might have evolved without the NHS, we only need to look at Australia. Healthcare in Australia initially evolved largely along British lines, so up until the immediate post-war period, the two countries were very similar in that respect. From then on, however, they diverged sharply.
While Britain went for a wholesale nationalisation of its entire healthcare sector, Australia went for a more gradual approach of widening access within the part-private, decentralised, insurance-based system it inherited. The result is an interesting public-private-hybrid system, which, as I describe in my new report Wizards of Oz (published by the Institute of Economic Affairs), produces some impressive results, and which deserves a closer look.
The Australian state runs a universal health insurance programme, Medicare. Medicare, however, is not the ‘Australian NHS’ – because there is no ‘Australian NHS’. It really is just that: an insurance programme. It pays for a large proportion of healthcare costs, but it does not run any healthcare facilities of its own. The actual provision of healthcare is the responsibility of Australia’s state and territories, as well as a large independent healthcare sector.
Although Medicare covers everybody, more than half of the Australian population also have private health insurance cover. This is made more affordable by tax rebates: people with private health insurance are less likely to use publicly funded healthcare, and the Australian state recognises that fact via the tax system.
Private insurance offers shorter waiting times, greater choice, and potentially, higher levels of comfort and convenience. Private health insurers are not allowed to discriminate on the basis of health status: they could not, for example, deny coverage on the basis of risk factors or pre-existing conditions. Nor could they charge higher premiums on that basis, so people in better health subsidise people in poor health, much like in European social insurance systems.
Total healthcare spending is slightly lower in Australia: in 2019, the UK spent just over 10% of GDP on healthcare, while Australia spent just over 9%. Patient outcomes, however, are vastly better in Australia on most measures. Survival rates for the most common types of cancer are several percentage points higher. Despite Australia’s more dispersed settlement structure (which results in longer average distances to hospitals), mortality rates for people who suffer strokes and heart attacks are several percentage points lower. The number of avoidable premature deaths is more than 40% higher in the UK.
We cannot directly compare the two systems in terms of how they coped with the Covid-19 pandemic, because the UK had vastly higher Covid infection rates, which is obviously not the fault of the NHS. But what we can do is compare each country to a peer group of countries which are comparable in terms of Covid prevalence. We can, for example, compare the UK to some of its similarly Covid-ravaged European neighbours, while comparing Australia to New Zealand, and the likes of Taiwan and Singapore. If we do that, it turns out that the UK is a relatively poor performer within its peer group, while Australia is about as good as any of its peers.
The takeaway message from all this is not that we should ditch the NHS, and import the Australian system wholesale instead. The point is simply that there are some interesting alternatives out there, that some of those produce remarkably good results, and that we would benefit from knowing a little bit more about them.
The former Health Secretary Matt Hancock once described the NHS as “the best gift a nation ever gave itself.” It is time to look that gift horse a bit more closely in the mouth.
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