Making the NHS the best insurance policy in the world


In the developed world, where individual capability is key to economic success, healthy populations are vital for future quality of life and wealth. For example, returning the 2.5 million people on incapacity benefits to work would increase UK GDP by £80 billion per year – an increase of five percentage points.

Countries are competing in the race for health to deliver high quality healthcare that is not only responsive to consumers but also driving for fitter, healthier populations. This race is currently being won by the Swiss and Japanese health systems that perform top across health outcomes. These are followed by France, Germany, Australia and the Netherlands. Finally, the UK and the US lag behind.

Reform’s research shows that two factors are crucial in the race for health supremacy; that the system provides universal coverage and that it has strong elements of insurance. Voluntary coverage is ineffective (due to the problem of adverse selection) and inequitable. The only major developed country which does not guarantee access is the USA. The universal cover provided by the NHS is a valuable strength.

But the NHS lacks the elements of insurance that are common elsewhere. International case studies show that insurance incentives:

  • provide reasons for individuals and authorities to value long term improvements in health and wellbeing
  • define exactly what individuals are covered for, ending the postcode lottery and empowering individuals to demand their rights from providers
  • achieve greater value
  • de-politicise healthcare

These incentives could be introduced by changing the National Health Service to a National Health Protection System. Taxpayer funding and guaranteed access would continue, but individuals would be empowered to decide which approved Health Protection Provider to use. Custody of individual health outcomes would be made independent; it would no longer be in the hands of politicians.

This would mean the following for individuals:

  • A “healthcare protection premium” of £2,000 per year would be paid out of general taxation, equivalent to the current NHS cost per individual in England. NB this is similar to the cost of health insurance in France and the Netherlands.
  • A choice of where to spend the health protection premium, between Health Protection Providers (HPPs). Coverage for a wide, core level of health treatment, including all essential operations and treatments.
  • Extra services, such as gym membership, and rebates for healthy living, for example smoking cessation, offered by HPPs to attract customers.
  • Regulation of HPPs by government to ensure they reach minimum standards.
  • The ability to top-up their premium to have extra services such as certain drugs, cosmetic surgery or better accommodation in hospitals. People in the UK already value their healthcare enough to spend £1,600 per family per year on health and fitness. The current Departmental review of top-up payments for cancer drugs and the draft EU Directive on cross-border healthcare are likely to lead to greater clarity over what individuals are entitled to and to a new market in insurance for top-up payments.
  • Guaranteed accident and emergency cover through a general agreement with insurers, on the model of the Dutch compulsory insurance system.

Because of the positive developments in the UK, this is a task of evolution rather than revolution which could be complete in three to five years. The key steps would be turning Primary Care Trusts (PCTs) into Health Protection Providers; allowing other insurers to join the system; and defining the core entitlement to healthcare.

In January 2008 the Prime Minister described the NHS as “the best insurance policy in the world”. That is the right idea. It means radical change, to combine universal coverage with the focus on the patient evident in other countries. Success would see the UK rejoin the top rank of international health systems and become again the envy of the world.

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