The controversy about testing for Covid-19 shows why the NHS is too centralised
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When all this is over, one hears again and again, things will never be the same. The coronovirus pandemic will be a watershed. We will learn from our mistakes. Next time the NHS will be better funded and better prepared. But will it? Only if we change the way we do healthcare in Britain beyond recognition.
Perhaps because we are still in the midst of the crisis, we are not yet asking the fundamental questions. In particular: has the “National” in National Health Service outlived its usefulness? Is it finally time to take another look at the bureaucratic, top-down, taxpayer-funded system we have inherited from the 1940s?
This question has been rendered more urgent and acute by the failure of the NHS and Public Health England (another, though much newer, centralised state bureaucracy) to organise testing for Covid-19 quickly and on a scale to compare with Germany. The German health system is much less centralised than Britain’s. Healthcare there is regionally organised and funded by social insurance, which is compulsory but offers plenty of choice. Unlike the NHS, which is almost entirely state-financed, the German model combines the best of private insurance and public interest in a carefully regulated healthcare marketplace. Laboratory research and medical testing are also decentralised. There are fewer bottlenecks and bureaucrats to get in the way. Unhindered, the Germans have been testing seven times as many people for Covid-19 as the British — and deaths, both in absolute numbers and as a proportion of those infected, are much lower.
There is a certain irony in this awkward comparison. Germany used to have — and to some extent still does — a reputation as the land of bureaucracy par excellence. Officialdom there can still be obtrusive and, indeed, officious. But after 1945, the American occupiers were the dominant influence on the Federal Republic that emerged in Western Germany. Rather than the state socialism advocated by the British, under the Labour Government of Clement Attlee, the West Germans preferred to emulate the free market framework of the United States — which made possible the postwar German “economic miracle”. What made the inevitable inequalities that soon emerged palatable to the German electorate was Ludwig Erhard’s formula of a “social market economy”: a regulated capitalism, with “social” provisions that were flexible but fair.
Health, like welfare, had been based on insurance since the era of Bismarck and the Germans saw no reason to change it. In Britain, the Beveridge Report had also advocated a system based on insurance, but Aneurin Bevan, the Labour Minister of Health, insisted on a state socialist model that would be paid for directly from taxation and hence “free at the point of use”. The NHS was created in order to give politicians control over healthcare, thereby imposing an obligation on them to divert a steadily rising proportion of fiscal revenue to pay for an ever more top-heavy system that now employs 1.2 million staff. The NHS may have replaced Anglicanism as the nearest thing the British have to a religion, but we are just as reluctant to pay for our hospitals as we are to maintain our churches.
Another irony of this story is that it all goes back to the last great pandemic, Spanish Flu. From 1918 to 1920, this virus killed tens of millions worldwide, including some 228,000 in the UK. In an illuminating article for The Times today (behind a paywall), Sir Anthony Seldon reminds us that the impact of Spanish Flu — which killed both his grandparents, young Jewish immigrants from Ukraine — was initially underestimated by the British medical establishment and ignored by politicians who were understandably focused on the war. Only when Lloyd George, the Prime Minister, contracted the virus in September 1918 did Parliament take notice of the pandemic. Lloyd George survived, but the effects were so devastating that the coalition Government he led created a Ministry of Health.
The assumption, reasonable enough under the circumstances, was that such epidemics required a coordinated response from a centralised health system. Ever since, the heavy hand of the state has replaced Adam Smith’s “invisible hand” of the market in allocating resources in the field of healthcare. The British have been pioneers in countless fields of medicine, but seldom have these breakthroughs resulted from central planning. Ever since the discovery of penicillin, individual teams of researchers have broken new ground with little or no help from above. There is of course a role for central leadership during a pandemic in mass-producing ventilators or testing kits, but even here the Germans have stolen a march on us. This is not mainly the fault of individual officials, but of a sclerotic, risk-averse system, which leaves laboratories waiting for orders from above.
The centralised model of the NHS has now been tested to destruction. Once the pandemic is over, there is an urgent need to examine how the UK, starting with England, could move towards the social insurance model that has served Germany so well. We could preserve many of the best aspects of our NHS, while gradually encouraging younger generations to insure their families’ health through workplace schemes underpinned by the Government. The ultimate aim would be a better-funded, more efficient, decentralised health service. Coronavirus has demonstrated that it is time, not merely for reform of the NHS, but for revolution.
