July 14, 2024

Holistic Pulse

Healthcare is more important

Is French-style health care the answer? Why we should stop idealising other health systems

4 min read

It was only a matter of time before a politician in this general election campaign argued that we stop tinkering with what we have and entirely rewrite how the NHS is funded to resolve the many problems facing our beleaguered health system.

Last week the call came from Nigel Farage, who said the “model through which we fund health is wrong”, and that the cure would be a social health insurance system as used in France. This isn’t the first time that insurance-based systems have been idealised for seeming to raise more money and achieve better results than tax-based models like the NHS. But it’s misinformed for several reasons, and can distract from other more legitimate ways our health system could be improved to deliver better results.

Not necessarily better outcomes

First, there’s no compelling evidence that any specific funding model leads to better clinical outcomes, whether insurance or tax based. Multiple studies have looked at this question, concluding that there are no positive health gains linked with moving to a social health insurance system, and that no one type of funding model is systematically better when it comes to delivering value for money.

This is why we see variation in outcomes among countries with similar approaches. Countries with social health insurance like France, the Netherlands and Germany all perform better than the UK on key indicators, including rates of death from avoidable causes, life expectancy at birth, and infant and maternal mortality rates. But so do countries with tax-based systems like the NHS, such as Denmark, Sweden, New Zealand and Norway. There are many questions our relative performance should raise, but a big bang reform to change the funding model would be a politically, administratively and operationally expensive way to entirely miss the point.

It’s also important to note that social health insurance systems and tax-based ones aren’t nearly as different as they’re often made out to be. Social health insurance essentially functions as payroll tax in many countries, and many countries with social health insurance subsidise these revenues with other taxes, as employer and employee-based contributions have fallen short of required levels.

Some of the apparent advantages of insurance-based systems – i.e. that they are more easily insulated from government budget-setting cycles and the short-term decision-making that comes with them – have also been challenged. In the case of France, the national government has increasingly played a larger role in health care expenditure since 2010, through the introduction of spending targets and monitoring mechanisms that reduce the independence of statutory health insurers.

Investing more in health

What likely matters more than funding approach is the overall level of investment in health. The UK has historically spent less per person on health than many high-income European countries across the funding model gamut, including France, Germany, the Netherlands, Belgium, Austria, Denmark, Ireland, Norway, Sweden and Switzerland – see the chart below. (We should note that the UK currently spends more as a percentage of its GDP on health than most high-income countries, but this has more to do with the relative size of our economy and the jump in health spending to deal with Covid-19 and its recovery, which has been especially pronounced in the UK.)

To match French health expenditure (in PPP-adjusted terms), the UK would have to spend roughly 19% more per person according to the latest OECD data, or £58 billion.

The funding model therefore isn’t a great predictor of how much different countries spend on health or how well they raise funds, which comes down to differences in population needs, political choices and the overall health of the economy (with richer countries tending to spend more on health care, regardless of funding model).

Looking internationally doesn’t tell us very much about what the NHS should spend, just how much it could. And countries that have spent more on health haven’t been immune to the health system pressures that the NHS now confronts, insurance-based systems or otherwise. While the severity of the challenges differ, access to care has been a growing problem in France, with patients waiting two months on average to see some specialists in 2023, compared to just over a month in 2019. Likewise, 7% of hospital activity had to close in 2023 due to insufficient numbers of staff, and 60% of French residents reported missing a medical appointment in the previous five years due to access or financial reasons. 

Seeing the bigger picture

Social health insurance funding models are clearly not a shortcut to a more resilient health system, which depends on not only the level of resources available, but the stability of those funds, how well they are distributed to meet population needs, and the extent to which they can be flexed to respond quickly to pressures. There are no doubt important lessons the UK can and should learn from other countries, but we should stop reducing health system performance to any one funding model, when the answer is always more complex than that. 

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