It is often repeated that more competition should be introduced into the NHS to keep costs down - but it may in fact increase them.
It is often repeated that more competition should be introduced into the NHS to keep costs down. No doubt the prime minister will repeat the talking point in his much-trailed speech today. As leader of the opposition in 2009, claiming his plans for the NHS were in the spirit of Labour ministers who have since criticised the current policy, he said:
“The argument for more competition in the NHS seemed to have been won a long time ago. Blairites like Alan Milburn were evangelists for market mechanisms to drive up standards and drive down costs.”
However, there is evidence to suggest that choice and competition in healthcare will, in fact, increase the UK’s spending on health. Take this chart from Kaiser Permanente, who provide healthcare in the United States, on health spends in developed countries:
In fact, the United Kingdom, with its comparitively statist system, keeps costs down. Why might this be? It may be that in systems based on competition and choice, the lack of expertise on behalf of consumers means that providers can overcharge or charge for treatments which, in all honesty, probably do not have that much chance of working.
That the government are proposing a two-step choice – consumers choose thier GPs, who in turn help choose the treatment – may help with this; but then again, the consumer will always be at some information disadvantage.
How an information disadvantage can work in practice can be seen in the energy market, where the regulator OfGem has criticised providers for offering bamboozling products that means time-pressed consumers can’t make an informed choice, therby pushing up prices.
As it happens, it is the market in energy that the chief executive of Monitor, the body who will be responsible for competition in the NHS under the government’s plans, sees the NHS reforms as emulating.
43 Responses to “How competition in the NHS may push up healthcare costs”
scandalousbill
Ed,
You say,
“What about Germany? They now have a majority private provider system. Their costs have reduced at the same time paitent satisfaction has gone up”
The issue is not one of public vs. private healthcare. Both Germany and France, arguably, have demonstrated much better performance than the NHS and both are predominantly private sector oriented. However, Holland has a virtually exclusive public healthcare system, and consistently has outperformed the former three. The primary distinction between these nations and the UK relates more to a larger investment in healthcare which all three continental nations have committed when compared with the UK investment in the NHS.
P Spence
Let’s be clear. The Tory elite have never and do not today like the NHS. It stands outside their economic dogma in which the Market and exchange value determine resource allocation. The NHS is founded on collectivist values that they hold in disdain. Allied with the drive to generate large profit for their sponsors, they aim to break the NHS. This is the opportunity they have waited many years to grasp.
Declan Burns
Introducing the market to doesn't drive down costs; the state can be the only fair provider of medical services. http://bit.ly/jjjffU
matthew pitt
Privatisation may push costs up, not down RT @leftfootfwd: How competition in the NHS may push up healthcare costs http://bit.ly/iSM2uA
Martin McGrath
The NHS is too expensive and needs more competition to make it more efficient? No, no it doesn't. http://bit.ly/jjjffU