How to fix the NHS

My interpretation of an idea from Tim Harford in ‘The Undercover Economist’.

Firstly, scrap the idea that the NHS is a free service at the point of access. Instead, we could take something like £1000 off everyone’s annual income tax and this is placed in a compulsory high interest bank accounts, one for each person of the population. This account may only be used for treatment.

If someone pays less than £1000 in tax each year, they will be given the money by the Government. Those on disability benefits will have extra money for treatment. People are permitted to top up their account with their own money if they wish.

People are unlikely to need to use this cash in their younger years meaning that they will have maybe tens of thousands to spend from middle age onwards, paying for treatment. Cheap catastrophic insurance will ensure that one treatment of maybe £15,000 or so will not drain the account of someone who has had a serious accident or illness.

The result is a system where the power is in the hands of the patient. Doctors do not decide whether they should do a procedure to keep with their budget. The patient knows whether a treatment is worth it and will improve their quality of life. Politics is also less likely to disrupt a treatment plan.

For example, it is the patient’s choice whether they want cataract treatment. This is not life threatening but only the patient knows if it will improve their quality of life.

Unlike the American system, very little power is in the hands of insurance companies; only in relatively rare cases.

The system is fair for all, rich and poor, for they all have the same £1000 a year.

Less people will use the service when they do not need it, and they will not queue up for a bad cold.

A similar system was adopted by Malaysia and has been widely praised as one of the most efficient systems in the world. Life expectancy is 80 as well.

Overall, this system should be more effective and a better service, with shorter waiting lists.


  • Idea attributed to this brilliant book by Tim Harford:
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