Skip to Content

Who Pays for Health Care?

This year is the 60th anniversary of the National Health Service. Workers like it, but capitalists dont, at least not any more. Why?

That the NHS became old enough to claim its bus pass last month will be a source of pride to members of the Labour Party something to hold in their hearts as the gloom gathers around their fading regency over Britain.  60 years of providing health care free at the point of use is something that socialists can acknowledge, albeit with qualification.  Likewise, the continued existence of such a service sticks in the craw of the purist ideologues of capital, and serves as a constant irritant to the rapacious demand of capitalism for profits.  That accounts for why the health service remains at the heart of the political battlefield.

For example, when the Daily Telegraph celebrated the fiftieth anniversary of the end of food rationing in 2004 they used it as an excuse to have a pop at the health service.  After all, if rationing which they claimed was, in effect, a National Food Service, was not needed, then why have a National Health Service? (www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/07/03/cmian03.xml). Socialists would, of course, argue the exact opposite and that is what the Torygraph's hacks were exactly afraid of, the threat of the good example.

So afraid, that they try to turn it into the bad example.  Following the most energetic proponents of capitalism, they maintain that state run services cannot be efficient.  This is a line that ultimately stems from the Austrian economist Ludwig Von Mises, who argued that without markets in capital (i.e. productive goods) rational resource allocation could not be made.  His latter-day followers would argue that the NHS can only function because it can approximate the prices of its goods from general society; but, that in that approximation it still cannot achieve due efficiency.

Others follow the other Austrian economist Freidrich Hayek in asserting that without entrepreneurship, the managers of a state bureaucracy lack incentive and drive, and thus do not serve the customers (i.e. patients) as well they might.  These folk would also argue that information does not flow freely within the NHS, and cannot effectively do so, for much the same reasons.  They point to manipulation of statistics and fiddling to meet central government targets as proof of this.

It has been traditional to use waiting lists as proof of that inefficiency, and Labour has spent the last ten years desperately trying to prove those waiting lists can be eliminated.  These, though, only exist because the NHS is a government bureaucracy that aims to treat everyone were it a market led system, those lists would become invisible, as those who couldn't afford to pay would cease to present themselves, and the dreaded rationing would occur unseen.  Indeed, that was the situation at the foundation of the NHS, where the war had seen the state discover just how unhealthy the population was when they were shanghaied into battle.

Another favoured trick has been to compare, say, the number of expensive scanners in the United States to those in the UK.  Although the US does have higher numbers, much of that is driven by different medical priorities, and, more importantly, different donor priorities.  As much medicine in the US relies on charity (itself a sign that markets cannot provide the service required) their funding is subject to potlatching – spectacular donation one-upmanship in which big, shiny projects will be privileged over more mundane treatments.

Of course, the NHS has had serious funding/allocation problems. In its early days demand was much higher than anticipated, and so consequently it cost more. (en.wikipedia.org/wiki/History_of_the_National_Health_Service) Since the 1980's successive governments have tried to rectify its perceived shortcomings through creating psuedomarkets.  The problem is, however, for the die-hard agents of capital, pseudo markets will never be good enough.

This can be seen from the more recent propaganda.  Following a Office of National Statistics report in April this year the Telegraph proclaimed "NHS gets more money but productivity falls". They alleged that "billions of pounds of extra investment in the health service has led to a 10 per cent drop in productivity,"  because:

Although more patients are being treated on the NHS with more operations being carried out, more drugs being prescribed and the population enjoying better health, the rise has failed to match the increase in investment, a report from the Office of National Statistics shows.

That is, although all of these manifest improvements were occurring, the Telegraph spun it as a decline in productivity which meant that "unless NHS productivity can be improved the principle of a health service funded out of general taxation may become unaffordable, experts warn."(www.telegraph.co.uk/news/newstopics/politics/health/1576999/NHS-gets-mor...)  All this because the ratio of money spent to the outputs achieved declined (or rather, the outputs did not rise as fast as the increased expenditure)

The cold, cold logic of capital: if the returns arent good enough, if the money could be more profitably spent elsewhere, then it should be so.  The actual concrete outcomes become a secondary consideration behind the magnitude of the capital involved.  Another recent government report indicates how this might weigh on the capitalist mind.  The report, the annual "Value added scoreboard" (www.innovation.gov.uk/value_added/default.asp?page=76) looks at company accounts in the UK and across Europe to show which firms have added the most value to the economy.  It defines value added as: Value Added = Sales less Costs of bought-in goods and services:

Value Added can be calculated from a companys accounts by adding together operating profit, employee costs, depreciation and amortisation/impairment charges.

That is, it does not measure value as a ratio of total capital invested, but as a fraction of year on year expenditure.  For the government and for capitalists, it's a measure of how well firms are meeting peoples' desires (apparently).  For socialists, this is a very good thing to measure, since, after all, this shows pretty accurately how much workers are exploited for all that value added is our unpaid labour being realised something like £646 billion in the top 800 companies.    Of that, £3.5 billion is accounted for by "health care equipment and services."  Given that the NHS costs an annual £89.7 billion it's clear that were its services to be made commercially available, then the headline value added figure for the UK would rise, and health care as a sector would leap up in terms of the national league tables.

Capital with its incessant drive accumulate, accumulate  looks upon all that capital, all those potential profits, all that money pouring into the NHS and dreams of taking it for itself, of taking out its state rival and bringing the riches and all that potential surplus value into its own cold avaricious arms.  It would also mean not having to pay the dreaded taxes that the government snatches.

Although socialists recognise the benefits the NHS brings to workers who otherwise would not have access to healthcare, they are far from the ardent uncritical supporters that the membership of the Labour Party tend to be.  They see that although the NHS suggests possibilities for how a service free at the point of use and based on needs could be organised, fundamentally, it is not free from the market system and a long way from being the fount of joy Labour supporters proclaim it to be.

Although the NHS has to simulate markets internally (much as many big companies do) it actually exists within a market economy.  It competes to buy drugs, materials and even staff.  When the Telegraph bewails that much of the money poured into the NHS over the last ten years went into wages and salaries, it is commiserating over its own basic principle: that people should try to enrich themselves and get the most for their skills and abilities that they can.  NHS workers are compelled by the threat or prospect of poverty to play the market game as best they can.

Likewise, it must buy hospitals and premises from commercial builders and landowners.  It has to pay the form of rent known as a patent to the drugs manufacturers. And it has to have the payroll clerks, the accountants, the procurement officers, the lawyers and the whole array of staff specifically to manage all of this market activity, adding greatly to its cost.

Further, technical innovation comes with a market drive.  As the BBC points out in a special report for the anniversary, all the new machines and robots that are becoming available for health care cost a fortune, can the NHS afford to keep up with innovation? (news.bbc.co.uk/1/hi/health/7477627.stm). As with any other industry, capitalism is constantly revolutionising the process of healthcare.  More and better results can be achieved with more and better machinery that is with ever greater capital investment.  Personal healthcare has always been relatively labour intensive, and it would be politically inconvenient to try and rationalise staff costs the way that an ordinary capitalist firm would with wage cuts and redundancies.

This interweaving with the market system also nullifies some of the wilder claims that the NHS is a massive benefit to the working class - many capitalist states manage to exist without such a system.  Health costs are, for the most part, not optional, you either need treatment or you don't (though the poor are long adept at putting up with ailments it's too dear for them to pay to relieve).  By hook or by crook, if the employers want to have a workforce fit to perform their role, it's going to have to pay for health care.  This can either be done through wages directly, or as a workplace benefit or through the state.  If provided as a state or private benefit, it simply has the effect of lessening the upwards pressure of wages by workers who need to pay for their and their loved one’s treatment.  If it was paid directly through wages, employers would have to risk paying those sums to workers who might never need health treatment: i.e. they'd be paying them (in the employers' eyes) too much.

Let's be clear, this is an automatic effect of the wages system. The proponents of the NHS are sincere (for the most part) in believing that it brings a massive benefit to society.  Certainly, it helps the Labour Party by being a threatened cherished item to rally their supporters around and with which to beat the Tories.  The wages system, though, which will only return to the workers the price the market will bear for sustaining their ability to work can snatch with one hand what the state gives with another.  Our health and well being only matters so far as it enables employers to use us for profit, as can be seen in those parts of the world where surplus population is left to rot.

The health service, also fails to address that other feature of the market system: inequality.  The figures are quite starkly clear.  For example, in the London Borough of Camden - home to some of the most deprived parts of the country - the difference in life expectancy can be a decade.  A man living in Belsize ward can expect to live to be 80.2 years old, while less than a mile away in Kilburn the life expectancy is 69.9 years.(www.camdenpct.nhs.uk/pages/go.asp?PageID=621).  Just a mile or two more away in Somers Town (the ward which includes Kings Cross station, and St. Pancras International - with the longest Champagne bar in the world) death rates are 35 percent higher than the national average.(www.thecnj.co.uk/camden/2008/010308/health010308.html)

This is part of a worsening trend:

During the period 1972-6, the gap in life expectancy between social classes I and V was 5.4 years for men and 4.8 years for women. By the time New Labour succeeded the Tories in government, these gaps had risen to 9.4 years and 6.3 years respectively. (See tables 1 and 3 in: ‘Life expectancy by social class’, UK Government Statistics 

 "Kill, kill, kill, killing the poor", as the Dead Kennedies sang.  It is clear that the effects of poverty, and the associated lifestyle are deleterious to health, and that simply having the services available of the NHS isn't sufficient to stop the theft of years from the working and unemployed poor.

PIK SMEET