NHS: Choose Your Fate

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Prescriptions for more market forces in the NHS are not a healthy development, writes Allyson Pollock.

When the prime minister needed urgent medical care for his heart problems earlier this year he didn't exercise any 'choice', and surely didn't want to. He was simply taken to the nearest hospital, and was happy to let professionals decide what treatment he needed and where he could best get it - in another NHS hospital, as it happened. The incident highlights a basic point about healthcare - unlike a pick and mix sweets counter, healthcare isn't something we always want to make choices about. Just occasionally we may choose between alternative treatments, with different potential benefits and risks, and we may want a second opinion. But what we want, by and large, is to know we will get nothing but the best, and that there are enough well trained and highly motivated professionals available, near enough to where we live and work, to provide it. We want clean, quiet hospital wards with appropriate privacy and decent food. Yet 'choice' is the slogan under which the government is pushing through a radical reorganisation of the NHS, on market principles. So what is really going on?

The reality is that 'choice in healthcare' is code for a distinctive process of privatisation. Central to this is the Health and Social Care (Community Health and Standards) Act of November 2003, which is breaking up, à la British Rail, what were once public hospitals and community services into hundreds of competing quasi-private corporations, the so called 'foundation trusts'. These are licensed to bring other, fully private, companies into the direct provision of clinical care. The government is also bringing in large, mainly US, healthcare corporations, primarily to provide standardised kinds of treatment, such as hip replacement surgery, in competition with NHS hospitals - against the advice of the medical and nursing professions, and without public consultation or debate. Some of these corporations have notorious histories of defrauding the US government of hundreds of millions of dollars through false billing, raising serious questions about the close nexus between the private healthcare industry, policy advisers and the Labour government. A case in point is the UnitedHealth group and its subsidiary Evercare, which has recently been awarded contracts to manage clinical care of elderly people in Britain, despite having paid $7 million in fines in the US for false charging.

Unaccountable shareholders

The government's model for the future, never made explicit, is the one already adopted for other privatised public services; breaking with direct parliamentary accountability and putting in charge an independent regulator - independent, that is, of parliament as well as the government. The funding will continue to come from taxes, but as with British Rail much of it - including the new money the government is at last putting in after two decades of financial starvation - will not end up paying for new investment or direct clinical care. It will disappear into the pockets of unaccountable shareholders, and into the multiple new layers of administration required to run a system based on prices and market principles. The Conservatives' so called 'internal market reforms' of the 1990s increased the share of NHS spending on administration from 5 percent to 11 percent. The new system of 'foundation trust' hospitals and pricing will push this up still further, towards the US level of 24 percent.

The fragmentation of the NHS seems bound to result in increasing inequalities in access to care. Some foundation trusts and areas already have more resources than others. The new system of league tables tends to highlight this, showing that some areas have third division levels of resources and access to services, because they cannot pay the 'transfer fees' required to attract the specialist services and staff they need. But the new regulator has no mandate to do anything about this. On the contrary, the effects of the new healthcare market will tend to make such inequalities worse.

When challenged on this, the government argues that competition and the profit motive 'drives efficiencies', and points to studies purporting to show this - its current favourites are about the US health maintenance organisation Kaiser Permanente, based in California. However, the evidence shows that markets, even when underwritten by the government, do not deliver comprehensive, universal healthcare, and that for-profit health providers deliver worse care, more expensively, than public providers.

Private predators

The real nature of what is being done to the NHS has to be sought in the wider picture of government policy towards the public sector and social services. Over the last three decades the public institutions that were created or brought under national ownership and control have been turned over to shareholders and the FTSE 100 biggest corporations - water, electricity, gas, telecoms, railways, bus services, airlines, airports, docks, prisons and broadcasting. Now it is the turn of education and health, which together account for about 20 percent of GDP. Since 1948 they have been protected from private predators - but no longer. The transnational, mainly US, corporations in the service sector are hungry for new sources of profit, and Europe's welfare systems offers lucrative opportunities. Thanks in large part to the muscle of the US in the World Bank, the International Monetary Fund, the World Trade Organisation and the World Health Organisation, and increasingly in the European Commission too, an official orthodoxy has been established that the private sector is more efficient than bureaucratic and corrupt governments, and that all public services should as far as possible be privately provided.

And when the evidence doesn't support these claims, the argument is presented instead in the rhetoric of 'choice', 'diversity' and community 'ownership'. But just how much does the community have control over the failed Public-Private Partnership school schemes in East Lothian and Tower Hamlets, where children face a delayed school year and building sites filled with Porta-kabins? And how much more has the taxpayer had to pay for this failure? How much control will local populations have over their new foundation trust hospitals, presented by the government as a new form of popular local ownership but in fact tightly controlled by effectively self-selecting directors, carefully insulated from the local electorate and focused on the bottom line?

The real meaning of choice becomes clear only when the overall direction of the government's market-based reforms is appreciated. Choice in healthcare only becomes relevant when the best healthcare is no longer available to everyone, everywhere - the NHS's founding goal. Then some people will be able to exercise choice at the expense of others, as already happens in schools. Under the new system hospitals will increasingly have to choose very carefully the patients and services they provide on the basis of their profitability - just as teaching hospitals already compete for lucrative services like cancer and cardiology.

In schools parental 'choice' is difficult to make, and for many if not most parents it is a cruel sham. In healthcare it will be worse still. Underprivileged areas and underprivileged individuals - the most frail and needy, the old and those with chronic illness - will be left behind, because the frail and needy have unpredictable needs and present hospitals with high financial risks. Services like those for chronic arthritis, complex diseases and mental illnesses, and rehabilitation services for people suffering from stroke and heart disease, are difficult to price and very difficult to make a surplus from. In the same spirit some particularly needy people are already targeted explicitly for exclusion, ie the 'failed' asylum seekers who were recently debarred by the government from being given free NHS treatment.

With the tacit acceptance of growing inequality of provision, both Conservatives and Labour are playing with the idea of vouchers, where people are given the choice of taking a fixed sum of money out of tax revenues and going with it to the private sector, topping it up from their own resources. The Tories are being upfront about it, whereas Labour is doing it through the backdoor, having in effect introduced this in long term care for the elderly, where families and relatives can choose to pay top-up fees to obtain higher quality care. But quite apart from the aggravated inequality this will produce, it will also add dramatically to the overall cost of healthcare. This is because when the risk of needing costly treatment is shared or 'pooled' among the whole population, it is very small, whereas market competition drives hospitals and insurers to try to select the healthy and reject those who need care most. Even the small pools of those judged least at risk have higher costs because the costs are shared over small numbers, while the costs for the pool of those most at risk are very high.

This is the system we actually had in 1948 when half the population, mainly children, women, and the old, had no access to healthcare. And this is the system that the Labour government is now busy importing from the US - where 50 million people, including 10 million children, have no healthcare cover at all, where healthcare costs $1 trillion a year, and where the take-home pay of the chief executives of the large healthcare companies - many of whom make large contributions to George W Bush's election campaign funds - averages $11 million a year.

What is to be done before your child, your relative or you yourself are rendered invisible and rejected by the market? In both education and health we must restore the mechanisms and structures that promote needs-based service provision. This means the abolition of market principles, including the expensive system of pricing and financial flows and provider-dominated structures. It means returning to a fair resource allocation formula, and restoring public sector accounting principles and data for monitoring health service and educational need, provision, and expenditure. Above all it means restoring democratic accountability in the running of services, taking control away from unaccountable regulators and corporations and giving it back to the people.

In the pursuit of marketisation we are on the brink of undoing the social contract that gave everyone universal entitlement to healthcare and education - the loss of universal access to higher education, dentistry and long term care are only early casualties of these policies. We are already close to forgetting what we once had, and what we have lost. Our hard-won entitlements are being given away without public debate. The consequences will be more far-reaching than those responsible can begin to understand.


Allyson Pollock is a professor at the Public Health Policy Unit, University College London. Her new book NHS plc is published by Verso and is reviewed in this issue.