On the cost of the NHS, Care, Privatisation, Tax

Here are some comments I see now from right wing commentators in the UK which I believe should be challenged:

  • “Why should I pay for other peoples…..?”   (The Forgotten Man argument)
  • “Tax is theft” (Related to the above)
  • “Privatisation is good”
  • “Where will we get the money?”

Ideas I like to counter the above include

  • Pooled risk for things like health is fairer.
  • Tax is a social contract.
  • Privatisation has been shown to cost more and achieve less.
  • Privatisation concentrates wealth, sometimes out of the country, that could help the country.

Privatisation in the UK

The government has presided over increasing privatisation of services in the UK. We have increasing use of private health companies in the NHS’ internal market. Social housing has been sold off so now local councils must pay rent to socially house people. Care, the current subject of headlines, is private and expensive. I believe that our care situation echoes the American health situation.

The NHS, Pooled Risk and reduced cost

“Why should you have to pay for my healthcare?”. I’ve had cancer. It was a number of years ago and thankfully I’m fine now. We all just accept that I was treated on the NHS, and all would expect the same if if happened to us. Using an inflation calculator and the estimated private fee that I would have had to pay, I could claim that my treatment cost you, “The Taxpayer” £330,000 in today’s money (or about 1p each). That’s more than my house is worth assuming I had no mortgage. It would have more than bankrupted me.

We take it for granted that we’d be covered. We go out and do things, buy garden trampolines for our kids, take risk, no worry.

If I was in America I’d likely be in trouble now. Any  break in insurance cover and my cancer becomes a pre-existing condition. Kids have asthma? Same for them. I’d be facing huge premiums or gaps in cover. But why should you pay for my care – right?

The average family health cover in America cost $18142 per year in 2016. If you’re employed then your employer covers most of that, but it still costs the economy.

If you think that too much of your tax goes on my or other people’s health – ask yourself if your tax is more than £14,000. If you are on the average UK salary or lower then it won’t be.

Even those who have insurance face deductibles, copayments, exclusions. Even the insured have trouble paying for health. My cancer could have had serious financial consequences beyond 6 months out of work if I was in America and insured.

You may be well now – but can you guarantee you’ll be well in the future?

That is pooled risk. We all pay in to the NHS no matter how well we are. I didn’t think I was going to get cancer in my mid 20s.

The American health system cost 16.6% of GDP in 2014.  The British under 10%  (OECD.org). More recent data, if I can find it, is more polarised. That cost is borne by the economy. Whether private or tax, through insurance premiums paid by the employer or higher salaries or taxation, it is the economy which ultimately pays.

The American economy pays more than the British economy for health.

Using figures from the World Bank data for health spending in 2014: American public health spending runs at about 48.3%, British about 83.1%. Total health spending per capita is $9403 and $3935. This allows us to calculate the “Cost to the Tax Payer” at $4523 and $3270 respectively.

The American Tax Payer pays 38% more on health than the British Tax Payer, and gets so much less back in return!

So where do we get to money for these “free gifts”? It turns out that it costs everyone more not to. Could we also apply this to elderly care?

Economy of Scale

The NHS can benefit from economy of scale. Social housing can benefit from economy of scale. Both can buy what they need in bulk. One team of repairmen can service multiple houses. An institution that’s already good at looking after poorly people can expand to look after old poorly people, and in doing so perhaps deal with its current bed blocking problems too by being nicely connected up.

Keep money in the economy

Private would be great if the money was ploughed back into re-investment. This doesn’t seem to happen, or if it does happen doesn’t necessarily happen here. Public spending on utilities does keep money in our economy. Here we come to the idea of public spending as a form of quantitive easing, and taxation as the opposite force. If the government can spend on infrastructure, can invest, then that money goes to workers and business that provide. The challenge is to balance those forces. Too much money can cause inflation and instability, and we need to borrow against the hope that our money will have value when repaid. This is a completely different model to the notion of public debt as household debt that is often used in public discourse.

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