Can we ignore NHS charges any longer?

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Part of Commission on the Future of Health and Social Care in England

This is the second in a series of guest blogs that we’ll be publishing in the run-up to the launch of the final report from the Commission on the Future of Health and Social Care in England.

Each blog will focus on one of the possible options for funding future health and social care considered in the commission’s interim report. Here, Andrew Haldenby and Cathy Corrie of independent think-tank Reform discuss why new NHS charges are necessary and why no political party wants to talk about them. 

The commission will make its final recommendations on 4 September.

This is a guest blog post. The views expressed are the authors’ own and do not necessarily represent the views of The King’s Fund.

The independent Commission on the Future of Health and Social Care in England has produced an admirable and comprehensive interim report. One of the few things that might be added is the grim fiscal context for the next period of health financing. It can’t be stated often enough that public finances for the next three decades are in a completely different position to when Sir Derek Wanless carried out the last landmark review of NHS financing in 2001/02.

When Sir Derek reported, the national debt was an entirely manageable 40 per cent of GDP. The country was (too) relaxed about running annual deficits during a time of economic growth across the Western world. Times have changed since then. The coalition government has implemented historic policy changes such as the means-testing of Child Benefit and the cutting of the police budget by 25 per cent in real terms. Even so, the annual deficit on public finances will be around £70 billion on the day of the general election.

When the deficit is eliminated in around 2019, debt will peak at 80 per cent of GDP, its highest level since 1966. No political party will want to leave it there, if only because the size of interest payments at that point will be more than half the annual budget of the NHS in England. Looking further ahead, the Office for Budget Responsibility forecasts that national debt will only come down to 60 per cent of GDP before heading back towards 70 and 80 per cent from the 2030s, driven by the costs of health and pension entitlements.

The point of all this is to emphasise that new ideas will be needed to finance the NHS and social care. Ideas that are different from the increases in tax-funded spending which Sir Derek Wanless advocated. Taxation is already going to have to stay unusually high to finance the recovery from deficit and debt. It will be extremely difficult to raise new hypothecated income taxes for the NHS and social care on top of this. An extra penny on income tax or National Insurance, which is all that could be imagined, would raise only enough to fund the NHS for a fortnight (around £5 billion). It would not be a game changer.

This is why the commission is right to suggest new thinking on efficiency and charges. The first of these is the bigger opportunity but the second should not be ruled out. As the commission says, charges have been part of the English NHS since 1951. In the early years of the NHS, they raised a greater proportion of the budget than they do now.

They are also common internationally. All countries in the Organisation for Economic Co-operation and Development charge for prescriptions. Two-thirds charge for GP appointments and half charge for elements of secondary care (typically the ‘hotel costs’ of overnight stay in hospital). 

Since 2008, France has introduced a range of small but broad-based charges, non-reimbursable by health insurance, for prescriptions (€0.50), GP appointments (€1) and ambulance transport (€2) as well as higher charges for parts of hospital care (€13.50 to €18). Italy has introduced and Ireland has increased controversial charges for unnecessary A&E attendance. The Australian government announced a new £3.90 charge per GP consultation earlier this year.

There are obvious concerns over equity for those on low incomes and the potential to deter patients from preventative care. Income-based exemptions would therefore be key to ensure that essential services are always within the means of those who need them. As the commission says, England is unusual in providing exemption from payment for nine out of ten prescriptions. A more positive idea is that charges could be designed to encourage positive behaviour. Norman Warner, the former Minister of State for Health Reform, has suggested that an annual NHS membership ‘fee’ could be used as an incentive for a yearly health review.

Research by Reform, carried out last year, found that a £10 charge for GP consultations (with exemptions on the basis of age and income) could raise £1.2 billion each year for the NHS. Reforming prescription charges could raise an additional £1.4 billion each year. This would help plug the annual funding gap of £4 billion, estimated by NHS England.

In England though, there is absolutely no sign that the political parties want to open up a debate on charging. The parties neither want to abolish existing charges nor alter their scope. As the fiscal backdrop worsens, a political debate is nevertheless underway. A recent poll of the general public found that 48 per cent of respondents were in favour of tax rises to fund the NHS, 21 per cent in favour of charges, and 19 per cent would introduce some form of rationing. As noted above, tax rises will be hard to deliver.

Few will want to debate higher charges but tough choices on NHS and social care funding are becoming increasingly difficult to ignore.

Andrew Haldenby is Director of the independent think-tank Reform. Cathy Corrie is Senior Researcher at Reform.

This is a guest blog post. The views expressed are the authors’ own and do not necessarily represent the views of The King’s Fund.


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Comment date
25 January 2015

Barry Kinshuck

Family Dentistry
Comment date
24 August 2014
As dentists we have collecting patients charges since 1952. There are exemptions for those on low income. Thus I don't see the problem with introducing patient charges!
However it is about time all Prescription over the counter medicines were made unavailable on prescription. Why should tablets such as aspirin, paracetamol etc be available on prescription?
Why should over 60's get free prescriptions?
When are we going to realise that charges need to be made?
The time for change is now!

Pearl Baker

Independent Mental Health Advocate and Advisor,
Independent Advocate and Advisor/Carer
Comment date
21 August 2014
As an Independent Mental Health Advocate and Advisor of thirty years experience. I can report the plight of the sick, vulnerable, and poor is getting decidedly worse. Uniformity across the country regarding the 'Integration' of health and social care is necessary, failure to have a 'toolbar' to refer and work to is the problem.

There are so many conferences, meetings, guidelines, policies, UN Conventions, the Equality Act 2010, the health and social care act, the Care Act 2014, so what is the problem. It is about this knowledge being 'retained' by those individuals responsible for its implementations.

Care Manager Co-ordinators are the 'key' they need to be well educated, including their ability to understand and retain information, to enable them to deliver a service to their patient.

I have supported many individuals suffering from a 'severe and enduring mental illness' referred to me by Psychatrists, GPs, Lawyers. If I can deliver acting as a 'Care Manager Co-Ordinator' the Statutory Authorities should be able to do this to. I did operate a crisis telephone service as well to my 'patients', and it didn't cost the NHS a penny. I funded this service myself.

Roger Steer

Healthcare Audit Consultants ltd
Comment date
21 August 2014
There are parallels with the Scottish Debate and the policies to overcome the financial crisis in 2008.
In Scotland the debate on the future will not hang in the balance according to fractional financial calculations but on whether Independence is wanted or not.
If we want the NHS, and most people do, then the task of politicians is to find the money not to undermine the institution.
Similarly when the banks were in crisis money was no object and the coffers were emptied.
The easiest way of raising the money is general taxation.
The problem is in agreeing on how much should be spent.
Tony Blairs' formulation of the european average I would argue needs to be tweaked to include the comparable countries and not necessarily include the full basket.
On that basis the UK spends in total (NHS and private) about 2% less of GDP or around £30BN less than it should.(WE IGNORE the US but the spending gap is even greater there)
There is no case financially for charging more to users - it deters patients , distorts service provision and is costly to administer.
Instead we should be looking at how we can utilise our academic, research and skilled human resources in Medicine,Pharmaceuticals, Biotechnology,genetics etc to sell services and products overseas to fund a modern health service, not worry overmuch about the bankers problems.

Mark Platt

Policy Advisor,
Comment date
21 August 2014
Just a quick point, 'PAM' may have only just been discovered by the KF, (although I'm not sure that's totally the case) but the Health Foundation have been pushing it over her for quite sometime, as has Angela Coulter, under the guise of patient involvement and shared decision-making

David Oliver

Consultant Physician,
Royal Berkshire Hospital
Comment date
21 August 2014
Although I do work for some of my time at the fund, my "day job" is as a busy frontline hospital doctor. I have done this for 26 years and am on the wards on call a great deal. I say this firstly because my response here is on my own account and not an official line from the Kings Fund. Secondly, because it contrasts sharply to the professional experience and engagement with the service using general public that people working at Reform or other politically-motivated think tanks have.

Here on the frontline, working at a hospital with 250 plus ED attenders each 24 hours, with 80 to 100 acute adult admissions in the same period with severe bed pressures even in summer (like most other providers in the NHS) the people I see when on call are either
a) Frail, old, often with dementia, often with several comorbidities and dependence on care
b) Working age or early post retirement adults with complex long term conditions, or stroke or cancer
c) Adults with social deprivation , mental health problems, often with drug or alcohol related issues compounded by chaotic lifestyles
d) People who are really very sick indeed with very acute care needs
e) People who have "defaulted" to acute sector because there just isn't the responsiveness, urgency, capacity or support in primary care, community or social services

If they do get admitted, especially older people, it can also be very hard to get them out again because of this same lack of capacity and support in the community

Which of these groups would Reform propose charging for service use? how would we guarantee (and we know this happens in the US) that the charges wouldn't put them off using services? Which would Reform exempt. The Devil is in the detail not the right wing market based ideology folks.

Meanwhilem in primary care, where the bulk (if not the highest cost and spend) of healthcare happens, exactly the same groups of service users consume most of the spend and activity. Again, which would Reform want to be charging

There is some kind of myth out there that typical service users are empowered, health literate, skyping, middle class professionals who are generally in good health. Not true.

With the number of exemptions required, there wouldn't be many service users left who had to pay. And in terms of fairness and equity, making people pay who have lived healthier lifestyles and don't consume many services would seem wrong. Surely, a model of shared risk is where we need to be? Nor do we want to scare people of using services

I regularly see older people who turn down much needed home care support because of means testing - this in turn makes it hard for them to stay at home and retain their independence and is a false economy. The same will happen with charging fo health care

And besides, as others have said, our system is relatively efficient and relatively underfunded compared to the rest of the west


Loy Lobo

Healthcare strategist and entrepreneur,
Comment date
21 August 2014
Yes, the NHS is lean when compared to the US. Yes, it is under financial pressure. However, the debate on finances seems to neglect creative options possible through process and technology change. These innovations don't take hold in the NHS because the budgets and incentives in the systems are not being aligned to the change. More significantly, a lot of the potential value of better engagement with patients and carers is being left on the table. Readers should take a look at David Oliver's blog at,2QJ3Y,FLWS10,9YX7Z,1

Michael Tremblay

Health policy advisor,
Cassis Limited
Comment date
21 August 2014
The problem with thinking of user charges as 'plugging gaps' means that they may in the end fail to be effective when the gaps don't get filled.

While I acknowledge the concern of the impact of charges on access, it may be useful to think differently about how this trade-off works. User charges in OECD countries as the Reform blog notes are widespread, common and accepted as the norm. How they work in other countries needs better understanding if the NHS were to go that way too. Not really understanding how they work and why, is important, as the bulk of the research on charges has been done by health economists using utility models. There are other ways to think about the impact of charges.

To refine the Reform comment on France, the fixed charges (that insurance doesn't reimburse) are part of the standard co-payment (around 25% depending on various factors) for which people purchase supplementary insurance. When people visit the doctor, they hand over cash/credit card, get a receipt to send to their insurer and then get their money back, or their insurer card.

The romantic notion that the NHS provides excellent care and good value of money is becoming a bit tired, though. Patients get what they get, which is often very good, despite the problems with funding, but that logic is unsustainable in the longer term. Good will on the part of people to work a few extra hours or fill in because there just aren't enough staff, only goes so far and cannot be a design principle for service delivery. Administrative parsimony goes only so far when it trumps better service.

The evidence to pay attention to, though, is that countries with charges have better clinical outcomes than the UK achieves. This is noteworthy as in these countries, patients also have direct access to specialists. As they say in Spain: I pay, I choose. Powerful stuff!

So introducing user charges in the NHS, far from the rather timid Reform proposal, would create a separate industry selling comprehensive supplementary insurance to cover this. From an economic perspective, this would enable a new, incremental income stream to emerge for the NHS and have a salient impact on service responsiveness, quality, and costs.

I was surprised Reform did not address the National Insurance fund. This mess is part of the underlying funding problem. The presumably ring-fenced NHS component of the NI fund could be converted into individual/family supplementary insurance (which would in effect hypothecate this money). Membership fees are a nonsense idea as they would lack any logic linking the fee to service value. Charges have the benefit of being specific. Putting the NI money into the hands of the taxpaying patient would have a therapeutic impact.

Contrary to Reform, though, co-payments may not deter patients from prevention. Research would show that co-payments create 'skin in the game' for patients, and therefore creates a vehicle for incentivising patient behaviour. In the US (where this is rapidly developing), for instance, we have patient activation which is old hat in the US (only recently 'discovered by the King's Fund by the way) and value-based insurance design, informed by advanced in behavioural economics (what the UK's 'nudge' unit is apparently all about) is opening up new thinking around behaviour and co-payments.

Given that in the NHS, the levers to influence patient behaviour and adherence/prevention are mainly moral, perhaps careful use of financial levers may add a more additional logic for patients.

Regretfully, I concur with Reform that few will want to debate user charges. However, there is a saying amongst us policy wonks: you often don't read the handwriting on the wall until your back is against it.

A Reynolds

Comment date
21 August 2014
This blog is written against a back drop of right wing projections. It contains none of the information that those of us using and working in the NHS may find useful: the cost incurred by the reforms introduced since 2001/2; the cost of hiring management consultancies whose recommendations were the introduction of layers of management with their meaningless arbitrary healthcare targets and financial penalties for NHS Trusts that fail to achieve 'Amber or Green'; a marked increases in NHS staff sickness; exodus of highly trained and experienced clinicians all trainined within our NHS and finally the cost of redundancies and re-employment. If this is reform what is the cost and how does it benefit our NHS? Perhaps we could apply some common sense on this occasion please.

Ben Odams

Local Govt Officer,
A County Council
Comment date
21 August 2014
Whilst i sympathise with the previous comments effectively opposing charges, the fundamental point is that we need to do something. The notion of taxing financial trades is sensible, but what happens during a recession? What do you do if London no longer remains an international trading hub.

Rather than one solution we need to look to a mixture of policies, firstly to cover the costs of basic health and care needs, possibly more insurance based on what people can afford (linked to income tax thresholds - so if you pay no icnome tax (sub £12,500 a year income) you dont pay any charges - but for me on a £30k+ salary i would face an array of charges - but also have a choice of insurances to cover it.

Before i get the 'we are not american' barrage - i am not advocating insurance to fund the NHS, but to fund the gap. What i am advocating is a mixed model that combines a link to our income tax allowing me to get coverage for my health needs and (logically) my eventual care needs.

If i already pay for my perscritpions and my neighbour doesnt, why not have a similar approach for my GP?

Overall i believe we need a mixed approach to solving the problems, taxing one thing over another is only part of the answer, we also need capital investment in facilities and equipment, we also need a sensible discussion about reducing beds and spare capacity where it is no longer needed. Put another way this is not simply about money - it is about the NHS in its eniriety.

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