Thursday, April 20, 2006

Three Lessons From NHS Crisis

As we fume and fret about the mounting NHS crisis, it's important for taxpayers to learn three key lessons. Lessons that must be committed to memory for the next time some plausible political fantasist tells us if we give him our wallets he can fix our public services.

First, loads more money doesn't work. Spending on the NHS has virtually doubled since 1999-2000 yet, from treatment rationing to hospital superbugs, the problems remain exactly the same. The simplistic socialist solution of more public money has not only failed but, by pumping up cost inflation, has plunged the whole bloated system into financial crisis. And it will all get much worse when the public spending boom hits the buffers in 2008 (see the excellent Reform for more).

Second, top-down public service reform doesn't work. From the disastrously expensive new doctors' contracts, to the catastrophic NHS supercomputer, politicians and bureaucrats are seeking to impose yet more of their their one-size-fits-all systems. It's all they know, and it keeps the reins of power in their hands. But what looks good on a Whitehall drawing board rarely bears much relationship to the diversity and general messiness of behaviour on the ground. As was pointed out long, long ago, human beings are not chess pieces.

Third, administered consumer choice doesn't work. Bureaucratic brainwaves such as the "pick and mix" hospital booking system are never more than pale heavily circumscribed imitations of real markets. What's more, their costly and convoluted administrative infrastructures are notoriously fragile and prone to collapse, as we're already seeing with "pick and mix". Real markets cut through all that by putting the cash directly in the hands of consumers not politicians.

Three lessons. Have we all memorised them? I'll be asking questions later.

PS As those well intentioned perestoikans discovered twenty years ago, tinkering with dysfunctional Soviet industries is very apt to accelerate their collapse. What we urgently need in health is the new approach based on real customer choice among competing providers. The European social insurance model offers an attractive way forward (see Reform for more details).

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