Tuesday, February 1, 2011

Save the NHS, push for limits on private health provision

Here’s an idea to stop the government from gutting the NHS - push for an amendment that limits the percentage of the NHS budget that GPs can farm out to the private sector.

An unexpected champion for this might turn out to be David Miliband, who landed one of the few real blows on the government’s health reform plans in yesterday’s Commons debate.

Speaking from the back-benches during the Health and Social Care Bill’s second reading debate, the elder Miliband accused the government of burying what he called the biggest change in the Bill: the introduction of price competition.

Miliband mentioned some LSE research (which I will post here if I track it down) that competition on quality improves health outcomes but competition on price and quality together makes things worse.

Andrew Lansley, the Health Secretary who had been defending his Bill quite well until then, had no answer. He muttered something about price caps and party politics and quickly moved on.

Miliband’s question is a good one - if the evidence shows that a key part of the reform is going to make things worse, why do it? And how did price competition get so buried in the details that MPs and the public have hardly noticed it?

The answer may lie in how the Bill was presented. A House of Commons research paper mentions fears about privatisation in such a cursory manner, you could be forgiven for thinking it was the view of a few nutty extremists. It reads: “Some respondents, particularly trade unions representing NHS staff, argued that the White Paper reforms threatened the core principles of the NHS and that they would open the door to much greater private sector involvement in the NHS" (page 8).

The same paper cites polling evidence that only a quarter of the public think the reforms are a good idea. The other three quarters of the population cannot all be healthcare union members; perhaps some of them will speak up too.

It also emerged in the debate how expensive private provision could be. The Bill's impact assessment has pencilled in a 14% premium for private healthcare providers, a brand new deadweight cost. On a back-of-the-envelope calculation, the NHS only has to lose one patient in 14 to private firms for that premium to wipe out all the £5bn administrative savings the government expects over the next five years.

In fact, private providers are likely to be far more successful in winning market share. If they capture half the NHS’s £100bn+ annual budget, private company shareholders would end up costing taxpayers £7bn extra every year, or 56,000 nurses in political currency. Not very austere.

Shadow health minister John Healey did a reasonable job of attacking the Bill, saying it would “drive free market ideology into the heart of the NHS”, become “the PM’s biggest broken promise” and replace the public service ethos of the NHS. But he is badly held back by his party’s own moves towards privatisation when it was in power.

Inevitably, MPs passed the vote last night with 321 ayes to 235 noes, a majority of 86. Only the Lib Dems can overturn that, which they won't as it would end the coalition.

The best way forward now is to fight for amendments that remove the price competition rules and set limits on the size of public sector provision. The time is now to ask MPs to push for these changes as the Bill heads to committee and report stages after yesterday's vote.

Tellingly, when Lansley was asked how big the private sector might become under his reform, he said he had no idea. A tight statutory limit, for example capped at 5% of the NHS budget, would keep it in check.

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