Insurance based care model could be the future.

Sep 14
min read
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Having been through over 10 major surgeries in my lifetime, I feel so lucky to have been supported so well by the NHS. As I argued last year, it’s an institution that deserves way more than a doorstep clap on a Thursday evening. Their staff put their lives on the line, daily, to keep the population safe, and they do it as a matter of course.

But being part of a medically trained family with a great heritage in working for the NHS, and working in health and care-tech myself, I can also see its current trajectory isn’t viable. Issues like staff burnout, dramatic underfunding, a tarnished reputation and a deterioration in the system aren’t going away. I can’t now foresee a future that doesn’t involve a change in the way the NHS is funded.

The pandemic has taken a dramatic toll, but the under-investment goes beyond that. According to a four-year commission of inquiry by the London School of Economics and the Lancet medical journal, £102bn is needed to cut avoidable deaths and level up the system. *

So, how can we get the NHS back to being the envy of the world, rather than being a shadow of its former shelf? Many would suggest increasing in funding, which would be a good idea, however, it won’t be long till the money runs out and more and more is needed to prop the system up. A directional change, or a step back approach is needed.  I think we should look at our neighbours in Europe – or even across the world – which operate healthcare models that are sustainable and don’t purely rely on deepening private funding.

What would an insurance-led model look like?
Broadly, an insurance-led care model with GP care covered and operations covered (as the Netherlands and Germany use) would be something to consider.

The benefits are numerous:

  • Everyone is covered
  • People are encouraged to take more ownership of their health
  • Patient-led care, creating a proactive model
  • Remote patient monitoring is used instead of hospital care as required
  • Care is a key part of the system
  • Reduction in public perception of wasting funds and/or an old boys’ club mentality

State insurance supplemented by finance

Let’s consider a system similar to the Netherlands, where there is state insurance and private, with the emphasis on proactive care reducing the need to move into long term care. More support is put behind GPs and doctors and community-based services, such as social prescribing. Hospitals “compete” for individuals to use them, which in turn should usher in advances and innovative ways to support the population.

Private health insurance gives you choice outside the public system. This is not an alien concept in the UK. We already have auto enrolment pension (the state pension), alongside private pensions, with a significant tax break for both the individual and their employer, for example.

An income-based tax system

In the Netherlands (and Germany, to some extent) in public healthcare, everybody who lives and works there is required to contribute towards health insurance on an income-based tax system. This insurance must be applied for within four months of arriving in the country. Public insurance is separated into two different schemes. The first of these covers GPs, emergencies and hospitalisation, while the other covers long-term treatment and nursing.

While the excellent public healthcare system provides basic services, taking out private international health insurance will provide expats with more comprehensive options for specialist treatments. These include a wider range of rehabilitation and maternity care programmes, more extensive dental treatments, and extended physiotherapy sessions, amongst others. **

The benefits of managed competition

Managed competition uses a combination of private markets and government regulations to try to reduce health care costs and improve the quality of care. The Netherlands strives to have the different parts of its system — the GPs, private insurers, home nurses, the emergency department — working together seamlessly. The Dutch have sought to use a tightly managed market to achieve universal healthcare, rather than a more socialised system like those seen elsewhere in Europe. ***

What would it cost?

Currently, nothing is taken directly from British workers to pay for the NHS. Instead, the service is funded from general taxation, and in recent years healthcare has accounted for just under 19% of government spending. So, around 19% of what a worker pays in income tax and National Insurance (NI) - the two employment-based tax streams – goes on healthcare.

In 2017, the UK spent £2,989 on average per person on healthcare. And someone earning just under £32,100 paid just under £3,900 income tax and just under £2,900 NI - almost exactly £6,750 in all. Around £1,282 of that would have gone on healthcare.

In comparison, the average basic Dutch health insurance premium in 2021 is about 120 Euros per month or 1440 annually. That's more than in the UK, however this covers:

  • Visits and treatments by a GP
  • Prescribed medication (not currently covered in the UK for working adults)
  • Hospital stays and treatments
  • Healthcare provided by (non-) physician specialists

Although 'basic' may suggest otherwise, the basic health insurance cover is already quite substantial.

It also includes:

  • Midwifery (birth-care)
  • Certain medical aids and health programmes
  • Psychological and mental health care
  • Physiotherapy for people with chronic diseases/conditions
  • Basic dental care
  • Speech-language pathology
  • Emergency medical care abroad (up to the Dutch tariffs)

Moving to a model that cherry picks the best of what everyone else has could support our growing system. Like our pensions, the costs could come directly out of salaries with employees able to pick from an approved, ringfenced selection of providers with transparent fixed costs.

In the Netherlands, people with lower incomes get additional government assistance to reduce their payments. The Dutch government also collects contributions from employers to help fund the insurance scheme and covers the cost for children; revenues are spread among the insurers based on the health status of their customers. Public financing covers about 75 percent of the system’s costs; the insurers have also generally operated as non-profits.

The reality is that the NHS cannot continue in its current state. I am incredibly grateful for everything that it has provided, and it is for that very reason I believe we can’t sit back and continue to watch it suffer. Yes, we know that underfunding is a problem and changing direction might not fully fix it, but how much longer can we stand by and watch our great healthcare institution fall further and further back, while not meeting the needs of the individuals it’s meant to support?

A cherry-picked system can still operate under the banner as a not-for-profit universal system of care. Everyone would receive the same level of access to the treatments you need to improve your health. Like the Japanese and Netherlands healthcare systems, there is a greater emphasis on local access and mandates insurance coverage for everyone, a greater level of attention is given to preventative care options instead of being reactive.

We must act and look to successful schemes as guidance, and with systems such as those in the Netherlands and Germany and even Japan being so successful, looking closer to home seems the sensible course of action. Looking at these systems we can see that that aggressive negotiations for low rates, generic drugs, and long-term price fixing makes it possible to reduce the cost of care quickly. It’s clear this could work and would allow a more person-focused system to be rolled out.

Article originally published in Open Access government September 27 2021.

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