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Could the pain of paying save the NHS?

A scan of the health section on BBC news reveals a great deal about the current state of the NHS. Articles such as “multi-tasking in the operating theatre” and “nine in 10 hospitals overcrowded” to “2000 doctors write a letter to the PM” paint a torrid picture. It’s no secret that the health service almost all of us rely on is facing significant pressures, but this is not new news.


Shortly before David Cameron became prime minister in 2010 he met with an economist from the U.S. named Steven Levitt. At the meeting, the two discussed problems the NHS and Levitt proposed a solution relying on the fact that when you don’t charge people for things, they tend to consume too much of them.


It’s obvious that the crisis is the result of that simple age-old interaction- that of demand and supply. Demand for NHS services has been rising consistently due to a growing and ageing population. Also, let’s be honest, many of are placing unnecessary pressures on the service whether it is through obesity, drinking, smoking, or other consumption habits.


With regard to supply the number of nurses, doctors, GP’s and hospitals is limited by the central government’s miserly budget, even at a time when its financing costs are running at close to zero.

When Levitt met Cameron, he proposed that the government post a cheque for £1,000 to every U.K. resident every year. 

Innovation is needed to ensure the future prosperity of the ailing health service. When Levitt met Cameron, he proposed that the government post a cheque for £1,000 to every U.K. resident every year. Everybody is then free to either put that cash in a healthcare savings pot or to purchase health insurance for example. Levitt also estimated a reduction in healthcare costs in the region of 15% (or £21bn in 2017).


The policy proposal has merit. Many of us may give a visit to the doctor a second thought when the cost comes straight out of our own pockets (which happen to be £1,000 deeper). However, many people will be worse of under the regime and often through no fault of their own. Suppose you break a leg; suppose you become terminally ill; odds are that if you haven’t been prudent and purchased health insurance you’ll be worse off, the annual sum may not cover your costs. In light of this, let’s consider an alternative.


Having just made use of a particular health service, consider being presented with a bill for your treatment. This bill summarizes the services you’ve received and shows you what it cost the practice to provide you with your treatment. At the bottom of the bill, there’s a blank box. You’re asked to put a figure in it that you’re willing to pay for the service you’ve received and you pay the amount you specify.


Everybody has the option to write £0 in the box. If, for example, you’ve received poor service that you’re not happy with, you can put £0. If you’re broke, you can put £0. If, for whatever reason imaginable you want to put £0, then you’re able to put £0. Crucially, the service remains absolutely free at the point of use. If you don’t want to pay, then don’t. If you do, then do. It is your choice.


The cost of a GP appointment is roughly £25; £106 for a visit to A&E; £2,000-3000 for broken leg treatment; £30,000 for a heart transplant.


Think about the following. What happens if everybody is willing to pay the full cost of the treatment they receive? In 2017, that’s roughly an additional £140bn – or £2,200 per person in the U.K. – to the NHS.


Next, think about what happens if 1 out of every 10 visits to the NHS you pay 10% of your treatment costs. That is to say in 1 out of every 10 visits to your GP, you pay £2.60. On 1 out of 10 visits to A&E, you pay £10 etcetera.


In 2017 the amount of funding directly received by the NHS would go up by roughly £1.4 billion. Importantly this increase is financed precisely by the people who want to do so. (Coincidentally those people who generally receive the most healthcare—that is the elderly—also happen to be the same people who have savings and are in a better position to pay.)


Think about the worst case in which nobody is willing to pay anything for the service they received. The policy has affected no change and society loses whatever it cost to implement the policy in the first place.


This proposal has the added benefit of raising awareness about the cost of NHS services. Next time you have a common cold or feel slightly under the weather, perhaps being more aware about how much it costs your GP to see you may make you think twice about booking an appointment.


Finally, let’s make use of the evidence that shows how much people dislike appearing miserly! After payment databases have grown over time, we can start to show people how much their counterparts have been paying for services.


Give people the freedom of choice and let’s see how much people really care about the NHS.


The text is written by Alex Ydlibi

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