National Health Service in the UK – How Does it Compare to the US Health Care System?

by Contributor

Health care reform is one of the big political topics this year, with many politicians pushing for a government run solution. This article covers the National Health Service (NHS), the state run health service in the United Kingdom. This article was written by Plonkee, who lives in England and writes for the personal finance blog, Plonkee Money, at

In the UK healthcare is mainly funded and provided by the National Health Service (NHS) which was founded in the late 1940s after the landslide electoral victory of the Labour party in the first post war election. The principles of the NHS are that healthcare should be provided based on medical need, not ability to pay and broadly speaking, healthcare in the UK remains free at the point of use.

How the NHS is funded

The NHS is funded through a combination of tax, and charges for some services. The budget is allocated by central government and is managed by local healthcare trusts.

In terms of costs, in the UK for our comprehensive health system, we pay less per head than the US federal government. As a percentage of GDP, we spend less than many of our European partners.

The pot of money for the NHS is not infinite, and whilst the majority of care is covered at the margins decisions are made about whether it is worth paying for a specific treatment.

How healthcare is provided

The NHS is not unlike a very, very large HMO. You access the majority of your care through your General Practitioner (GP). They refer you to other services as necessary. The GP acts as a gatekeeper to hospitals, clinics, and ancillary medical services and there are only a limited number of things for which you can self-refer:

  • sexual health services
  • maternity services
  • emergency and urgent care services

In principle decisions about what care you receive are based on medical need. In practice, as with insurance companies in the States, some treatments, medications or procedures can be limited if they are not seen as cost-effective, but all patients in a particular area will receive similar decisions. It operates pretty much as if there is a very, very long list of things that are covered. Stuff on the list you will get, stuff not on the list, you won’t.

There are waiting lists for most things, some of these move quickly, in days (like oncology appointments) and others move slowly, in months (some orthopaedic surgeries).


Patient choice is relatively limited in the NHS.

You can choose your GP practice (and your GP) from any in your local area that are accepting new patients. In more urban areas you can usually choose which hospital you go to for some things. This choice depends on the availability of services in your area, and people usually base their decisions on convenience, reputation and length of waiting list.

Appointment times are not always convenient for people, and especially for your first consultant appointment, you will often have no choice but to accept the time given.

In the absence of choice, the main driver of change and improvement in healthcare is political. Healthcare, like policing and education, can be a vote winning issue.


If you are staying the in UK for longer than six months, then all medical care is free, this includes doctors appointments, hospital stays, ouptatient clinics, nursing visits, physiotherapy, and mental health services.

Unless you obtain them in a hospital, prescription medications are not free. In England there is a £7.20 (approx $12) charge per prescription, if you have several prescriptions you can get prepayment certificates which may work out cheaper. Children do not have to pay prescription charges, and people on low incomes have reduced or no charges. Over the counter medicines are charged at cost price in the same way as they are in the US.

Dental care is not free. You pay either £16.50 (approx $27), £45.60 (approx $75) or £198 (approx $326) per course of treatment, depending on how complicated it is. Children do not have to pay dental charges, and people on low incomes have reduced or no charges.

Private care

If you are not happy with what is available to you under the NHS you are always welcome to pay for private healthcare. You can get supplementary private health insurance, or pay in cash.

Private healthcare takes place in private offices and hospitals and in private wings of NHS hospitals. It costs about £150 for a consultation. Private hospitals generally have no emergency rooms, or intensive care wards. Any patient requiring such care would be transferred to their nearest NHS hospital.

People use private care for acute elective surgery. Chronic illnesses are normally not covered by insurance and would be too expensive to pay out of pocket. Sometimes people pay for prescription medication that they cannot obtain on the NHS – often they do so in the hope that the NHS will start funding those medications before they run out of money.

The other main use of private care is for ancillary services, in some areas it is difficult to access physiotherapy and dentistry for non-urgent cases, or midwifery for homebirths on the NHS. Similarly, most complementary medicine is not funded by the NHS.

Travelling abroad for healthcare

There are broadly four reasons for traveling abroad for healthcare:

  • NHS transfer to another EU country – a small number of people are treated under the NHS in France or Germany if there is spare capacity there, under EU rules.
  • Cheaper private surgery – often cosmetic surgery and other elective procedures are cheaper abroad. Americans medical tourists travel for the same reasons. Typical countries for Brits are in eastern Europe, Turkey, Thailand and India.
  • New or experimental treatments not yet available in the UK – very rare, very expensive and not often effective. This is the only time people would travel to the States, as healthcare is so expensive over there. People from other countries travel to the UK for similar reasons, particularly for paediatric care at Great Ormond Street Hospital and pay for the privilege.
  • Treatments that are legally restricted in the UK – only really some fertility treatments, including gender selection of embryos (I believe Italy is one destination), and assisted suicide (Dignitas clinic in Switzerland is well known). Similarly, women from Ireland will travel to the UK for pregnancy terminations.

People in the UK do not travel for medical treatment because NHS hospitals are overcrowded or have third world standards.

Impact of the NHS on personal finance

As healthcare is free at the point of use, it is not a personal finance issue, except at the margins. Prescription and dental charges are low enough that most people can afford them, and the majority of treatment is covered by the NHS.

No one is ever bankrupted by medical bills – if you go privately, you pay upfront, or take out a loan. Similarly, lack of ability to pay doesn’t affect normally people’s ability to access healthcare, except for services that are difficult or impossible to obtain on the NHS, many of which are not strictly medically necessary (such as infertility treatment or cosmetic dentistry).

As access to healthcare is not tied to employment, a single person starting their own business enjoys the same healthcare as someone working for the government. Similarly, no one is denied coverage due to pre-existing conditions.

Taxes in the UK and the US are broadly similar – generally lower income people would be better off in the UK, and higher income people in the US, but it depends on the particular state. The cost of living in Britain is quite a lot higher in the UK, so people have less disposable income to spend on private healthcare.

British attitudes to the NHS

People in the UK like to moan. We complain about NHS waiting lists, overcrowding in A&E, cleanliness, inability to access NHS dentistry, paying for prescriptions,… Rightly or wrongly, these are seen as the result of underfunding, and attempts to introduce market reforms to the NHS. Most of the problems with the NHS are related to how it is provided – as a massive public organisation – rather than how it is funded – mainly via taxes.

Recent debates in the US have brought it home to many British people, the ideas that many Americans hold about the NHS. Given the outrage in our press, it’s safe to say that we are deeply offended. At some point, we may well undertake serious reform of our healthcare system, but it is a generally accepted truth that the last place we would look for inspiration is the current US system.

Collectively we are proud of our medical professionals, and the standard of healthcare you can receive here. Healthcare free at the point of use is a de facto right in the UK, which we have enjoyed for over 60 years.

Editor’s note: What are your thoughts on the NHS, or health care reform in the US?

Published or updated August 26, 2016.
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{ 10 comments… read them below or add one }

1 Jon

You can tell from article the author supports the UK public heath care system. It is not an unbiased report. Agree with Ron…someone does pay for the system, and currently the US does not have the $ to pay for it here.


2 Ryan

Jon, yes, I would agree, the author supports the NHS, and I also agree that someone pays for it. Taxes in the UK are fairly high (personal income taxes are slightly higher than in the US, while corporate taxes are lower: source). However, the UK also has a VAT on goods, which is higher than the sales taxes we see in the US.

But health insurance and out of pocket expenses that Americans experience are probably higher than the difference in taxes for many people. My company’s health care plan is probably average and in my opinion, it is very expensive for the coverage. We also have copays.

Any system has to be paid for – it’s just a matter of where the money comes from. In the US, individuals are largely responsible, while in the UK and many other European countries, the money comes from a collective pot.


3 Ron

“Healthcare free at the point of use is a de facto right in the UK, which we have enjoyed for over 60 years.”

One small point — it isn’t free … someone pays.


4 Vince

That’s why it says free AT THE POINT OF USE.

That’s what it means…


5 Curious Cat Investing Blog

The USA “health care” (really sickness management) system is broken. It is by far the most expensive in the world – (over 16 % of GDP, while many other rich countries spend below 10%). And the performance is mediocre at best. And it ravages the economy, creating massive distortions due to health insurance failures. I post about health care frequently:

I am surprise so many people seem willing to accept such horrible performance. It seems to me they must think the USA is just plain incompetent if they believe such bad performance is acceptable. If they had any confidence in the ability of the USA to be reasonably successful they certainly would not defend the horrible current performance. But if you just think we are too lame to do any better then I guess it makes sense to say others can do much better but we just are not good enough to do so. I don’t share the low opinion of the possibility for the USA to have a decent performance in health care that those defending the current bad system do.


6 Dan


I would not call our system broken. Many of the world’s greatest hospitals and doctors are to be found in the U.S. And don’t forget the incredible medical advances given to the world by U.S. medical professionals. If U.S. health care performance is so “mediocre”, why do so many foreigners travel here to avoid the medical rationing in their own countries?

However, there are certain factors about our current system that drag it down:

– Malpractice lawsuits, trial lawyers, and the resulting over-diagnosing and excess procedures
– The non tax-deductible status of non-employee provided health insurance
– Illegal immigration and an enormous welfare population. I don’t know what the comparative numbers are, but is there any other developed country that has as large a problem as we have? (i.e. the burden of providing millions of folks something for nothing. This is a drain on our entire economy.)

Over-condemning our hc system can lead to over-reaching solutions as are currently being proposed.


7 El Cid

Kick ass! In the UK doctors work for the joy of practicing and medicine falls out of the sky! It’s all free!!!1!


8 fredct

It’s funny because the author explicitly said “free at the point of use”. He went out of his way to say that, and also explicitly addresses the funding source of taxes.

Trying to argue against him saying it is entirely free is nothing but a strawman argument. He said no such thing.


9 Monevator

I believe the author is a she, not a he. 🙂

No system of health care is perfect. But neither is most methods of accounting for it.

For instance, the nhs was originally partly set up because the post war government needed the population to be healthy to rebuild Britain. It was far from a gift to the less wealthy, it was cold headed maths.

It is medical advance, growing longevity and our growing sense of entitlement that is causing problems, really, in terms of perception. The actual reality of the treatment and even the care is as good in the nhs as elsewhere for most people for most things.

Perhaps a tragedy of the commons scenario.


10 plonkee

Responding late, but yes I support the NHS because I am British – as in, my point of view fairly represents the majority view in the UK. Details on charges and availability of services are factually accurate.

It’s difficult to compare taxes, previous (brief) research I’ve done suggests that I would pay about the same taxes in the US as in the UK (give or take $50 a month, depending on the US state) and people who earn more than me would pay less tax in the US, people who earn less would pay more. I earn a few thousand per year above average.

As has been correctly pointed out, I have never argued that the NHS is free – it is free at the point of use. In principle the NHS provides healthcare based on medical need, not ability to pay. This principle is considered a de facto civil right in the UK – supported by political parties across the spectrum. We really are quite a different country, socially speaking.


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