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 plonkee.com.
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.
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?