London: The British National Health Service (NHS) is one of the iconic systems of democracy. Although it is permanently under pressure from the inside and outside, it is the envy of nations across the world who still struggle to provide free healthcare for citizens. How to fund the world’s most exemplary health system is an ongoing challenge for every government. In the year 2016-17, the NHS spend was £144.3bn which was 7.3% of GDP and £2,169 per head.
The responsibility for the provision and development of UK health services lies ultimately with the Secretary of State for Health in England and the devolved Scottish, Welsh and Northern Irish administrations. Polling has found that 53% of voters would support an increase in National Insurance Contributions (NIC) to pay for a larger NHS budget; 19% of NIC goes to NHS the rest covers State Pensions, unemployment benefits and sickness/disability allowances.
Levels of NHS funding are set by central government, the system is funded approx. 80% from general taxation. The NHS has a history of boom and bust funding and the revived debate about a segregated dedicated health tax, known as a hypothecated tax, hopes to add value not just to the conversation but to the budget. Essentially, the UK have this already with the TV licence fee and tuition fees.
The idea for a de-politicised tax is risky and many experts argue against NHS hypothecation, as Paul Johnson Director of Institute of Fiscal Studies wrote in The Times: “Proponents of hypothecation say that you could build up a fund and borrow from it during recessions and pay back in booms. Far from introducing the clear and transparent link between revenue and spending, this would increase complexity and opacity.” And Richard Murray Director of Policy at the Kings Fund, the think tank/charity that shapes health and social care policy and practice in the UK, said: “Getting full hypothecation to work would be a complex task and should not be undertaken lightly. Its advocates need to demonstrate how it will be an improvement on current funding arrangements–an attractive idea could end up back-firing unless the risks we have identified are tackled.”
An ageing population with high expectations, costly innovations and new threats such as mental health, obesity and epidemics, ensure that the stable funding for the NHS conundrum will continue.