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Up from Single-Payer

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from the magazine

Up from Single-Payer

Facing crushing healthcare costs, Britain and Canada should expand private responsibility for diagnostic services. Autumn 2022
Health Care

As Prime Minister Rishi Sunak assumes office, Britain’s single-payer health-care system confronts the “greatest workforce crisis in history,” according to a committee of MPs. The government lacks the capacity to boost health-care spending significantly, and decades of tight cost controls are yielding shortfalls in access to care. Canada faces similar challenges. While conservatives in both countries have shied away from major health-care reforms, there may be an opportunity to establish a foothold of private responsibility for diagnostic services, where supply could rapidly grow to meet demand.

The British National Health Service has more than 100,000 unfilled staffing vacancies, and hospitals have been increasingly unable to recruit medical personnel. British nurses were already being paid 40 percent less than their American counterparts in 2019, and inflation has eroded their incomes further. Shortages exist for operating theaters, diagnostic facilities, and beds, with expected funding increases unlikely to boost capacity substantially.

From 2015 to 2022, the proportion of patients in Britain waiting more than six weeks for diagnostic scans rose from 2 percent to 28 percent, while the share of cancer patients not getting treatment within two months of diagnosis rose from 19 percent to 38 percent. Over that time, the total number of patients waiting over 18 weeks for treatment has gone from 0.2 million to 2.3 million. Many therapies are entirely unavailable: the system refuses to cover drug treatments that cost more than $40,000 per year of life saved.

Canadian health care has been strained in the same way. From 2015 to 2021, median waiting times for specialty procedures extended from 18 weeks to 26. Canadians now face average waits of ten weeks for an MRI scan, 26 weeks to see a gynecologist, 46 weeks for orthopedic surgery, and 49 weeks for neurosurgery. Waiting for essential medical care is not a mere inconvenience, like waiting for new furniture to arrive. Patients typically suffer pain and anxiety while their conditions deteriorate, and they often die before receiving the needed treatment.

The shortfalls of single-payer health-care systems arise from a fundamental problem: available public funds aren’t growing as fast as the demand for health care because of aging, rising affluence, and improving medical capabilities. Over recent decades, the sophistication of surgical and pharmaceutical technologies has rapidly grown, and so has their expense. In 1960, a doctor may have been able to offer only bed rest and painkillers to a heart-attack patient. Today, cardiologists may contemplate various expensive treatment options, from bypass surgery to angioplasty, along with an armamentarium of costly drugs.

From the 1950s to the 1990s, public spending on Britain’s National Health Service seldom rose much above 4 percent of GDP. It surged above 7 percent under the Labour government that left power in 2010. Conservative-led governments since then have elevated spending in line with overall economic growth. But with the Labour Party attacking the government for the “biggest tax burden in 70 years,” the national debt poised to exceed GDP, and other spending priorities already squeezed, the NHS budget is unlikely to see major additional growth. Any big infusion of funds must therefore come from private insurance, which currently accounts for only 0.3 percent of Britain’s GDP.

In Britain, as in Canada, expanding private payment for health-care services has long been considered untenable, especially on the left. One practical concern is that expanding private consumption of health-care services could draw scarce medical resources from the public system, or at least push up costs. But this challenge should direct reform, not deter it. Policymakers should focus on increasing private responsibility for medical services where supply is most elastic. This would generate substantial improvements in quality and access to care, without greatly inflating the cost for current services. Given the time required to train medical staff, this is most likely achievable with capital-intensive services, such as diagnostic scans.

For example, the government could begin requiring patients with middle and higher incomes to pay for part of the cost of MRI scans (or for insurance to cover that expense). Supply would rapidly surge to meet the greater private willingness for timely access to such key services. This new capacity would indirectly serve to shorten waiting lists for tests for those who don’t pay more. It would also generate NHS budget savings, which could be used to improve services for which private cost-sharing had not been established.

This general strategy of combining public funds and private insurance to expand health-care capacity has proved successful recently in Australia and France, enabling these countries to avoid the gaps in access to care that have afflicted nations limited to a single-payer system. It also provides an alternative to hiking taxes on the poor to improve access to health-care services for the rich. This would seem to fit voter priorities. A 2015 Lord Ashcroft poll found 50 percent of Brits willing to consider introducing charges for NHS treatments to maintain access to care, while only 40 percent were willing to consider higher taxes for the purpose.

It might have been possible in the past to fund medically necessary services for all through public health-care spending. Those days are gone. Brits and Canadians clearly want access to the twenty-first-century medical capabilities that residents of other developed nations enjoy. Policymakers should recognize that they would be willing to pay for it, too.

Photo: PeopleImages/iStock

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