Comprehensive Universal And Free From Cradle To Grave: Case Study
‘Comprehensive, universal and free, from cradle to grave’ was the mission statement of the National Health Services, United Kingdom, when it was established in 1948. However, the cost of healthcare provision has risen to such an extent that many believe it is unsustainable (NHS, 2013). The NHS is highly labour intensive, employing 1.3 million people. According to NHS guide, in 2011 annual spending on the NHS was £123 billion which was approximately 20% of all government spending. Since a large part of healthcare is provided free of cost, demand is expanding to its maximum with failure to take steps to avoid the risks that the healthcare insures against.
By looking at the picture, in the short run the supply of healthcare is fixed, and the
supply curve is perfectly inelastic. The demand for healthcare is at its greatest when it is free to patients, and this means that there is an excess of demand over supply, with waiting lists for treatment and shortages of beds (Parkin 2009).With the development of new technology, new treatments, and new drugs the NHS’s ability to supply has increased, but at the same time it has encouraged demand to such an extent that demand substantially exceeds supply at present day. As the demand increases, it creates long waiting lists and shortages of hospital beds (Redwood, 2013). Privatization of the NHS would allow prices to rise to reflect the true cost of supply. But this would violate the principle of free and universal treatment that the foundation of NHS is based on. However, rising costs have forced a re-think on funding.
In 2002, the Wanless Report was published which considered several options for funding the NHS including taxation, internal markets, out-of-pocket payments and social and private insurance. While most economists accept the inevitability of public funding, in order to reduce inefficiencies, many favor the use of internal markets within the existing state funded structure (Department of Health, 2008).
As part of these reforms, hospitals would be allowed to compete with each other for patients from all over the country, creating an element of competition that previously did not exist. Patients would be able to exercise their choices, electing to be treated in the hospital of their choice. Also the flexibility provided would keep in check the rising demand for healthcare and try to reduce it if not be at par with the supply.
By looking at the picture, in the short run the supply of healthcare is fixed, and the
supply curve is perfectly inelastic. The demand for healthcare is at its greatest when it is free to patients, and this means that there is an excess of demand over supply, with waiting lists for treatment and shortages of beds (Parkin 2009).With the development of new technology, new treatments, and new drugs the NHS’s ability to supply has increased, but at the same time it has encouraged demand to such an extent that demand substantially exceeds supply at present day. As the demand increases, it creates long waiting lists and shortages of hospital beds (Redwood, 2013). Privatization of the NHS would allow prices to rise to reflect the true cost of supply. But this would violate the principle of free and universal treatment that the foundation of NHS is based on. However, rising costs have forced a re-think on funding.
In 2002, the Wanless Report was published which considered several options for funding the NHS including taxation, internal markets, out-of-pocket payments and social and private insurance. While most economists accept the inevitability of public funding, in order to reduce inefficiencies, many favor the use of internal markets within the existing state funded structure (Department of Health, 2008).
As part of these reforms, hospitals would be allowed to compete with each other for patients from all over the country, creating an element of competition that previously did not exist. Patients would be able to exercise their choices, electing to be treated in the hospital of their choice. Also the flexibility provided would keep in check the rising demand for healthcare and try to reduce it if not be at par with the supply.