The public say they back higher taxes to fund the NHS – so where does this leave intergenerational fairness?

David Kingman looks at the results of an interesting piece of research which gauged public support for higher spending on the NHS, and ponders what they mean in intergenerational termsUK spending cuts

The future of the NHS featured prominently in the recent seven-party television debate ahead of the 2015 general election, reflecting the fact that healthcare is an extremely important issue for many voters.

The 2015 general election comes at a crucial time for the NHS, when its economic future looks increasingly uncertain. Data released in March suggested that the total combined deficit of all NHS trusts could amount to £2.5 billion by the end of the current financial year, while a recent review concluded that NHS England will face a yawning £30 billion budget gap by the end of the next parliament unless it achieves £22 billion of planned efficiency savings and receives an extra £8 billion in annual funding from the Treasury. Whoever is in power after the next general election is clearly going to have some awkward decisions to make about how they deal with these problems.

Support for higher taxes

It is in this context that an interesting piece of new research has been published by the Health Foundation think tank. Working alongside the pollster Ipsos MORI, they convened a nationally representative panel of 1,792 British adults to ask them their views about the future of NHS funding.

This research produced three particularly eyecatching findings. First, a clear majority believed that the NHS should be protected from government cutbacks: when asked to choose which areas of government spending should be protected from funding cuts, 85% chose the NHS, while only 49% said schools – the second most popular option – and the police got just 27% (overseas aid received the least support, at just 5%).

Secondly, the survey respondents were clear that they would be willing to pay higher taxes in order to protect the NHS. When asked how the NHS should be protected from government cutbacks, 59% said they would be willing to pay higher taxes, while only 27% said they thought it would be a good idea to increase funding for the NHS through spending less on other government services, and just 7% said they would advocate the NHS doing less to avoid paying higher taxes or cuts to other government services. Raising revenue from within the NHS itself through making people pay charges was also unpopular: just 15% expressed support for paying a small fee to see your GP, and only 30% were in favour of increasing prescription charges.

Thirdly, many respondents were afraid that the NHS would no longer be “free at the point of use” in five years’ time, as only 25% said they “strongly agreed” that it would be. These findings raise some questions about how the next government should resolve the NHS funding crisis, not least with regard to intergenerational fairness.

The intergenerational dimension

It is almost inevitable that the biggest beneficiaries of spending on the NHS at any given point in time are older people, as the risk of ill health rises with age (most of the health resources that a person will consume over a lifetime are compressed into their last few years of life). Part of the reason why the NHS currently has a funding crisis is the increasing demand for services because of our ageing population. This means that lurking in the background to the debate on whether the NHS should remain “free at the point of use” is the fact that charging more directly for NHS services would to a large extent be a method of extracting resources from wealthier older people (presumably, charges would have to be means-tested in some way to avoid denying poorer people access to healthcare).

Charging people for health services would clearly be controversial, but it is often overlooked that a) private charges have played a much bigger role in funding the NHS in the past than they do today and b) they are widely used in the publically-funded healthcare systems of other Western countries, where patients are often expected to pay a small charge to visit their GP and/or to meet the costs of bed and board when they need to stay overnight in hospital. It is also worth noting that although hospitals and GP surgeries have broadly remained “free at the point of use” for most, to some extent this has been achieved at the expense of making people pay directly for other forms of healthcare which used to be free, such as dentistry and optometry. The point of this is not to suggest that fees and charges would necessarily be a good solution to the NHS’s funding problems (there would be plenty of drawbacks, not least the cost of administration), but merely that these arguments deserve to be heard in the debate.

It also deserves to be acknowledged that funding the NHS through levying higher taxes would involve larger transfers from the working-age population to those who have already retired. This intergenerational effect is currently exacerbated by the fact that a certain proportion of the money raised from National Insurance contributions is used to fund the NHS directly under an arcane formula, and – because of changes implemented under Gordon Brown – the contribution from National Insurance is currently particularly high in historical terms. People who are above retirement age no longer pay National Insurance, so this means the resource burdens weigh even more heavily on younger people (not to mention that the National Insurance system is more regressive than income tax, so it weighs especially heavily on poorer people too).

The results of the survey suggest that the population as a whole would be happy to go on paying to fund the NHS through higher taxes, as long as it remains “free at the point of use” – even though this may not be socially or intergenerationally equitable in practice. Where the balance should be struck in how we fund the NHS – between rich and poor, young and old, public versus private responsibility – is a key debate that so far none of the political parties seems to be willing to have with the general public. Until these questions have been given the attention they deserve, a genuinely sustainable, long-term solution to financing the NHS will remain elusive.