The National Health Service is funded through three means; general taxation, national insurance contributions, and private fees for a small number of services, including prescriptions and dentistry. The level of funding to the NHS is set annually by the central government through the Spending Review process. Where income has dropped in the form of national insurance contributions and private fees, general taxation is used to ensure the NHS receives its allocated budget. General taxation accounts for around 80% of that budget (1). In 2018/19 the budget for the NHS was £114b (2).
Utilising general taxation as the major source of funding is broadly seen as equitable due to the large-scale pooling of financial and health risks, but only in systems where the mechanism of taxation is progressive rather than regressive. (1) Given that general taxation is already utilised within the UK, the use of this means alone rather than another is efficient with low administrative costs when compared to implementing dual systems.
A further strength of general taxation as a major source of funding for universal health coverage is the power that this affords a government over the healthcare system. However, this assumes that the Government has the genuine health interests of its population at heart. Where the Government has competing priorities, the healthcare budget is vulnerable as general taxation may be required to be used elsewhere. In a country where patients are living longer, with more complex medical needs, and where expensive medical technologies are increasingly available, healthcare runs the risk of causing a financial burden.
Where increased healthcare costs cause a financial burden to a country that rely largely on general taxation, access to other financial income streams may be advantageous. This is where private fees or co-payments can reduce the burden on public finances. Given that private fees only contribute to a small proportion of the UK healthcare budget, this limits patient exposure to the private healthcare market where eligibility is assessed based upon risk selection and ability to pay. Comparatively minor use of this system in the UK minimises management and administrative costs associated with its use. It is important to recognise that resource wastage is a recognised barrier to the provision of universal healthcare (3).
Whilst the NHS is a world-renowned system of universal healthcare, it is far from perfect. The NHS is often criticised as being inefficient and resource-hungry and there are frequent debates about its funding model and whether patients should be charged for appointments (4). By definition, a tax-funded healthcare system depends upon a well-performing economy (5). Whilst the mix of financial income streams may be balanced to provide universal healthcare now, the optimal target will be forever changeable depending upon the world economy. In my opinion, there will never be a single static formula to address the funding needs of universal healthcare, but a majority funding by social means appears preferable.
- “How health care is funded | The King’s Fund.” 23 Mar. 2017, https://www.kingsfund.org.uk/publications/how-health-care-is-funded.
- “NHS Expenditure – House of Commons Library.” https://commonslibrary.parliament.uk/research-briefings/sn00724/.
- “The World Health Report – WHO.” https://www.who.int/whr/2010/10_summary_en.pdf.
- “What if people had to pay £10 to see a GP? | The NHS if ….” https://www.kingsfund.org.uk/reports/thenhsif/what-if-people-were-to-pay-10-to-see-a-gp/.
- “NHS England » Funding and efficiency.” https://www.england.nhs.uk/five-year-forward-view/next-steps-on-the-nhs-five-year-forward-view/funding-and-efficiency/.