What's Really Driving NHS Costs?

Let's get one thing straight from the off. The idea of charging a £10/month NHS "membership fee" is bloody stupid. Not just because it violates the principle that health provision should be free at the point of need, but for a whole host of other practical reasons. But let's glide Lord Warner's suggestion into a lay-by for the moment and deal with the concern he aims to address: that the NHS budget is spiralling out of control and something has to be done to arrest it.

Well, no. The NHS is not "unsustainable". The UK consistently ranks as a mid-table spender on health. But costs are increasing, and when you're talking billions of pounds here, billions of pounds there overall spending can look very scary indeed. Which is precisely why those on the right, including Warner, frame it as they do. By making it appear unaffordable they're breaking the ideological ground for yet marketisation, yet more shakedowns of the taxpayer by private health interests.

What are driving costs upwards though? Here are three key drivers.

The first of these is the outcome of what health watchers like to call the "epidemiological transition". That is back in the day, in the NHS's infant years a great effort was made to eradicate the causes of infectious diseases. Slum clearances, sanitation works, better nutrition, immunisation programmes worked together in a sequence of virtuous feedback that improved health and mortality rates right across the board. It's only now with the ominous spectre of drug-resistant TB and other nasties that infectious disease is becoming a public health concern. For most of the NHS's life, costs have been driven by the preponderance of chronic health problems. Partly associated with improved life expectancy, the care demands of broken, worn, aged bodies put pressures on health services. Quite apart from the rising demand for carers, the older you are the more you will need to see a doctor, take drugs, and go in and out of hospital. Particularly with present pensioners, the majority of whom would have had manual occupations of one sort or another, the wear and tear of working life can sneak up on you as you age.

Perhaps in the costs of chronic illness in the future will come down as the jobs of post-industrial Britain tend to be less physically demanding. But on the other hand, mental health problems are on the increase. The NHS may be left coping less with damaged bodies and more with broken minds.

The second are NHS supply arrangements - the servicing of PFI debts, procurement, and - increasingly - the growing costs of new medicines and medical technologies. Though gene screening and therapy, stem cell research, nanotechnology and exotic cocktails of wonder drugs promise a great deal, pharmaceutical companies are having to sink greater and greater quantities of capital into research with gradually diminishing returns. To recoup costs and, of course, make a profit new drugs and new treatments are very expensive. The NHS, however, can act like a captive market for many of these products. In fact, it might make sense to regard our health system as a manifestation of socialism for the rich. Big pharma takes a risk investing in a particular line of research, but mitigating it somewhat is the knowledge there's a guaranteed buyer already lined up. This allows drugs companies a great degree of latitude when it comes to determining a price and, of course, as profit maximisers they're going to ask for the highest price possible. Naturally, as their costs go up so does their charges.

Lastly, there is the bitter fruit of successive waves of marketisation, of which the Tory and LibDem Health and Social Care Act 2012 is the latest manifestation. While health care is free at the point of need in the majority of cases, the NHS is no longer an institution. What it is now is a label, under which wriggles public and private health providers all competing for commissioning contracts to deliver services. It's a complex, abstract business - which is why the government were able to force it through with comparatively little fuss. Strangely, ironically you might say, markets have been introduced into the NHS to drive costs down and strengthen efficiencies. As we know, there are too many politicians who believe the profit motive equals cheaper, better service. In the NHS, as it is in the HE sector too, reams of managers and accountants have to be kept on the payroll to put in bids for services, monitor market signals and, ludicrously, charm, schmooze and lobby funding bodies (Clinical Commissioning Groups) for contracts. Far from eliminating red tape, the market is building new layers of public bureaucracies. It's eating up resources that could be better spent elsewhere.

If one was truly concerned about the NHS bill, might I suggest these be looked at first? But returning to the £10 plan it is, once again, a mark of stupid empiricism - proving the Tories don't have a monopoly on this degenerate, decadent form of political thinking. There are two problems that immediately leap out. The first thing is the charge will strengthen the consumerist tendency among a layer of patients, fuelling a sense of service entitlement that could push up the demand for more GP visits, more drugs, more hospital appointments, and so on. The second and more serious issue is that a system of costs doesn't come for free - how much of the fee would be top sliced by local authorities (Warner supposes it would be collected via council tax)? How much would end up in NHS budgets? How much bureaucracy would be added to the NHS administering the charges system? It's a ridiculous idea, and had it appeared tomorrow it would be dismissed as the foolish larks of an obscure member of the upper house.