Health Bill: Where's the strategic argument?

David Cameron, Nick Clegg and Andrew Lansley visiting a hospital

There is something about the coalition's NHS reforms that does not add up: I am not referring to specific measures or party political differences currently dominating the debate (differences, be it noted, between Conservative and Lib Dems). I mean the mismatch between the scale of the problem and the method of debate.

The problem is this: if we really do face a massive funding gap, with NHS demand doubling to £230bn (in today's money, as Andrew Lansley writes) it is very hard to see the current policy process addressing that strategic problem.

For what we have is a process of late-stage horse trading between two parties in power.

I've written before that the original NHS Bill was at least coherent in its approach. Based on the belief that market forces could make the NHS efficient it created a clear customer - the GP practice, closer to the patient the better; a clear market mechanism, with the state in the shape of Monitor creating an environment of controlled competition; and a clear measure of value - Patient Reported Outcome Measurements as opposed to targets for number of operations done, patients seen etc.

Now we have an essentially parliamentary horse-trade going on, with the Health Select Committee and the Lib Dems (and the Lords on top of that who have not yet had their say) determined to pick apart the competition mechanism; and many actors determined to make the "customer" - ie the commissioning body - effectively congruent with local government, and heavily scrutinised.

In market theory the "selfishness" of the economic agent - in this case the GP practice - drives the efficiency of the system by forcing other economic agents to compete to provide the most efficient service. But if the GP practice is hidebound by oversight, and the competition body Monitor, which was originally designed to drive inefficient hospitals bust can no longer do so, it is hard to see the central argument of the reforms operating.

You have to add to this layer upon layer of professional interest groups having their say. The NHS Future Forum includes a prestigious list of managers and former professional body leaders, but its primary remit is to communicate the need for change;

  • the role of choice and competition for improving quality
  • how to ensure public accountability and patient involvement in the new system
  • how new arrangements for education and training can support the modernisation process
  • how advice from across a range of healthcare professions can improve patient care.

To me this does not add up to the difference between £130bn and £230bn. Bullet point one is the only item that really addresses the central issue of the need for a revolution in healthcare productivity. And even here it is not approached head on (because quality is not the same as productivity).

To make the debate on NHS reform comprehensible, and the claims testable against evidence, what we need is some form of baseline scenario that explains the level of productivity improvement needed to keep health costs below double their present cost. That is, how productivity interacts with health outcomes to make the system deliver more for less.

Actually Derek Wanless, in his famous report in 2002, giving Gordon Brown the green light to hike health spending, did attempt to spell out cost scenarios for the NHS.

He said health spending should double as a proportion of GDP between 2003 and 2013 and that by the mid-2020s the cost, as a proportion of GDP, would vary between 12.5% and 10.6%. That is, there would be a positive feedback effect from health reforms and efficiencies - above all at the demand level by addressing ill health - and a negative one from failing to do so. (If anybody can calculate what 12.5% would be in today's money, then we know the difference between the Wanless "worst case" and what Mr Lansley warns about today).

Right now the debate on the NHS Bill is overwhelmed with detail and sectional interest: that's good, because we're a democracy (I have just come back from the Philippines so am feeling generous towards our own political system).

But soon Mr Lansley needs to address the central question: how does the system he's going to re-propose to parliament achieve this combined goal of increased productivity and moderating demand through health promotion? Many clinicians believe it cannot, and that is at the heart of the central political objection.

When I sat face to face with Derek Wanless in 2002, what impressed me was the clarity of thinking about the long-term issues of health service productivity and demand. Wanless warned, basically, that if you are going to spend more, you need to spend it wisely and upfront so that the benign impacts of productivity filter through into every future year (key to this, remember, was the introduction of a national IT infrastructure for the NHS, which turned out to be a disaster and has failed).

I also remember thinking: "This is great because, even if we change governments, we can still keep coming back to the Wanless methodology and judging performance against intent."

But Wanless has now been "archived": the report no longer sits on the Treasury website but in the national archives of the Gordon Brown years.

(It's worth a look, though, here.)

As of now we are on course to exceed the "worst case" projections for long term health costs in the 2002 report.

The lesson for this and future governments is that the best laid plans go wrong: for Labour the IT system went wrong; Foundation Trusts manipulated the targets; productivity improved but not enough given the increase in the workforce and its pay.

If NHS Bill 2.0 produces a botch-job of reforms that then fails in its own terms we will then have had two decades of tinkering with the NHS to no strategic avail.

The way will then be open for those on the right and - it is worth emphasising - left of health policy who believe the funding model cannot cope, and that a form of social insurance, French, Swiss or German style, is necessary to meet the burgeoning demand for healthcare.

As the professions, politicians and patient groups scrap over the detail, that is the bigger picture.

Paul Mason, Economics editor, Newsnight Article written by Paul Mason Paul Mason Former economics editor, Newsnight

End of an era

After 12 years on Newsnight, Economics editor Paul Mason has moved on to pastures new and this blog is now closed.

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  • rate this

    Comment number 71.

    400 limit precludes justice. You share NHS Bill flawed assumptions. Problem of due respect and shades of grey. 'Government by persuasion', if of the less-informed majority, is not good enough. For hope we will stay 'persuaded', persuasion must also reach those with knowledge and experience. For 'government by representation', what would an economist see as the prime condition? Secure equality?

  • rate this

    Comment number 70.

    There can't be a 'market' in either diagnosis or prescription of complex treatments. Because neither the patients, nor us the funders, can have knowledge that matches the specialist. GPs usually don't know exactly what the specialist consultant does either; if they did, the consultant would be redundant.
    What we do know is that the cost of the clear majority of treatments is FALLING not rising.

  • rate this

    Comment number 69.

    The state of health is the state of ownership in the ownership of growth and development transparent morality to the meaning of good justice.

    Health is a multi faceted interrelated translation of conditions through the growth and development morality of the civilization. The big civilization is that part of progressive not included in a budget, designed around big society. BS dead parrot monopo

  • rate this

    Comment number 68.

    I agree Carol that you need more money, but why throw that money into an organisation that is top heavy where most of it gets swallowed in managers wages? I agree aswell that the system will never be perfect, but it could be somewhat leaner at the top.

  • rate this

    Comment number 67.

    "what you need is less management/redtape and more staff actually making people better"

    No, you will never get a perfect system - it's too big for perfection. What is required is just more money - that is the only reason why some systems are better than ours - more money. We just have to accept it. One idea which has been mooted is that we have a hypothecated tax just to fund the NHS.


Comments 5 of 71



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