Why Lansley’s patient vouchers will (probably) cost the NHS more than they save

This post was written by Owen on October 6, 2011
Posted Under: Health Care,Public Sector,Tories

For once, just for the sake of argument, let’s take Andrew Lansley at his word and assume that however keen he is on getting private providers in to do the work of the NHS, he’s not doing it because he’s corrupt, or because his wife is, or because he’s ideologically hell-bent on privatising whatever he can get away with, but that he’s doing it because he sincerely believes it’ll make the Health Service work better and more efficiently.

This may be the case. The trouble is, though, if you make this assumption it becomes kind of hard to explain the thinking behind the patient vouchers announcement he made on Tuesday evening. He wants patients with long-term medical problems to be given vouchers so they can get healthcare from either the NHS or a private insurance company, as they choose. And the thing is, there’s practically no way this is going to do anything other than help screw over the NHS. This, it seems to me, is overwhelmingly likely to be how it’s going to work:

  1. Some patients who get vouchers will use them to buy care from private insurance companies.
  2. The money for this comes out of the health budget, and would otherwise have gone to the NHS. The NHS loses money.
  3. Hospital trusts which are already on shaky financial ground suffer more. The quality of care they can offer patients also suffers. More patients choose not to use them (see step 2).
  4. Some patients turn out to need more care than is covered by the voucher (e.g. because their illness gets worse, or they planned to supplement the voucher with their own money to buy better care and find they can’t afford it for whatever reason). The extra care they need is provided by the NHS, because the NHS is never going to deny care to someone who needs it. The NHS has to spend more money to provide this care, out of a budget that’s been shrunk because the Department of Health assumed the NHS wouldn’t be providing this service.
  5. The NHS is (more) financially screwed.

This isn’t new – it’s basically the same mechanism that meant that government subsidy to the railways has more than doubled in real terms since the privatisation of British Rail. For-profit providers of public services and infrastructure know that the government is never going to let something as vital as the rail network or the health service fail, so once they’ve landed the contracts they want, they have every incentive to go over budget, pay large dividends to their shareholders and bonuses to their senior managers, and generally do everything they can to get as much cash as possible out of the deal while spending as little (and hence providing as crappy a service) as possible. Seriously, anyone want to place bets on it not turning out like this?

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Reader Comments

If this is about personal health budgets the story is more complex than you suggest. This is largely about community services, District Nurses, podiatry and the like, and the funding of long term stable situations. Money will not go to insurance companies. More likely to individual practitioners. The budget is not intended to deal with anything unforeseen.

It isn’t without problems, but the present situation is also not without problems

Written By Martin Rathfelder on October 6th, 2011 @ 11:08 pm

Why introduce an opportunity for money to leave a closed system, if that system still requires taxpayer input? If the example of rail is anything to go by, apparent successes in the first few years of introducing privatised elements to [public service] will be entirely down to [public service] receiving NO new investment over this period. After that, maintenance of [public service] skyrockets as the subsequent government steps in to rectify the private sector’s mistakes. The promises of increased benefits to the consumer through competition will be completely negated by the necessity of massive subsidies to keep various elements of the balkanised [public service] afloat, whilst the successful elements pull all profit out of the system to pay their executives ridiculous bonuses. The price/fare to the consumer then skyrockets above the level of inflation as private companies are forced to maintain ‘growth’ in a reticent marketplace. Then we complain when the devalued mess is bought by the Chinese.

Written By Rupert on October 7th, 2011 @ 12:26 am

There won’t be much competition in respect of personal budgets. the difficulty is more about finding people to deliver services in disparate localities. Most will be spent on existing NHS community providers. I don’t know what you mean by a closed system.

Written By Martin Rathfelder on October 9th, 2011 @ 12:16 am

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