Could private top-up insurance help fund the NHS?

This article first appeared in the BMJ

Current tax revenues cannot maintain healthcare standards, writes Christopher Smallwood, but David Wrigley worries that introducing inequity sounds the death knell of a service free for all who need it

Yes—Christopher Smallwood

It is hardly controversial to suggest that standards of healthcare in the NHS are declining. A stream of recent reports has shown the strain the NHS is under, drawing attention to a near universal failure to meet the target of four hours’ waiting time in emergency departments,1 the longest waiting times for operations since 2007, and unprecedented staff shortages. 
The principal cause of this lamentable state of affairs is unquestionably underfinancing of the system. In 2012-13, few trusts were in deficit but by 2015-16 the proportion had reached 85%.2 As the King’s Fund has said, we are “facing a health system buckling under the strain of huge financial pressures.”2
Current problems are set to intensify at an alarming rate. The budget for NHS England is planned to rise by 1.4% next year, then by 0.4% and 0.7% in the following two years, compared with an expected rise in demand and cost pressures of between 4% and 5% a year.3

Muddling through

If we try to go on “muddling through,” a steady erosion of standards is inescapable. Trusts under ferocious pressure to balance the books leave vacancies unfilled, cut the ratio of staff to patients, slash capital spending, defer operations, increase waiting times, cut training, and restrict the treatments they are prepared to offer.
The only hope of reversing this process is properly to debate how to bring more money into the NHS. The NHS will not be adequately financed as long as it relies exclusively on tax revenues. Given budgetary constraints, it is inconceivable that the government will approve NHS budgets rising more rapidly than gross domestic product to match rising demand.
The choice is stark: either we find new sources of finance to supplement tax revenues or we accept the prospect of declining standards for years ahead.

French model

Lessons can be learnt from some other European countries that provide excellent healthcare and are financed differently from our system. If we moved towards the French model, for example, mainstream healthcare could continue to be mainly financed from public funds, but the proportion of treatment costs covered would vary depending on the service provided.4 Treatment for catastrophic events would be paid for entirely by the state, with more minor treatments requiring a contribution from individuals. People on benefits would be exempt from such charges so that everyone could receive the care they needed.
The government could negotiate with insurance companies the premiums chargeable to provide cover for this menu of charges, as in Switzerland and the Netherlands, and also for the treatments which the NHS is likely to withdraw from as the financial squeeze continues. Without such a scheme, poorer people may lose access to these treatments.

Far lower premiums

A French style scheme would make top-up insurance readily affordable for most people. The premiums would be far lower than for private insurance at present because the bulk of costs would remain covered by the state.
The French experience is that people opt for top-up insurance in large numbers—95.5% of people have it and the rest have their healthcare paid for from social funds5—so it is not easy to describe this as a two tier service. Over time, it is possible to envisage that a quarter of healthcare in the UK would be paid for from these supplementary funds, as it is in France, enabling us once again to deliver international standards.
People on low incomes would be treated for free, with better-off people making contributions well within their means. We’re rich enough to drop the “free at the point of use” principle for the pragmatic “no one should be denied the healthcare they need for financial reasons.” How else can we reverse the decline in standards that now looks inevitable?

No—David Wrigley

The NHS is going through one of the toughest periods of its life.6 Every day we hear of general practices closing,7hospitals at full capacity,8 patients waiting in pain in emergency department corridors, ambulances queuing up with patients outside hospitals, and a social care system cut to the bone.
Politicians, commentators, and think tanks often say that we need a serious conversation about NHS funding.9 This usually means, “Let’s start making patients pay.” And because of the huge pressures the NHS is under some of them think that soon this will happen10: private companies will offer “fee-for-service” appointments or care, and private insurance companies will help write new “NHS policies” to give patients access to their GP or to pay for some operations or procedures.
Any appointments above a threshold, or more complex procedures, would be funded by patients “topping up.” This is common in the United States, which has one of the best healthcare systems—if you can afford it—but also some of the most iniquitous healthcare in the world.

Envy of the world

That is why the model of the NHS from 1948 onwards has been the envy of the world. It is paid for from general taxation, free at the point of use, and available to all no matter what your background, bank balance, or location in the UK. 
We must ask why we are in such a dire financial situation when in 2010 the NHS had the highest ever satisfaction rating and shortest ever waiting times.11 Since 2009 funding has increased by just 0.9% on average a year,12 and this is set to continue until 2020. Many economists think that the NHS needs a 3%-4% increase a year just to keep pace with demand.13
This 0.9% increase has allowed governments to say, “We have increased NHS funding year on year,” because inflation has been low.14 However, it does not make up the 3%-4% shortfall and has led to this disastrous financial situation throughout the NHS.

Cuts in funding

An explicit decision was made at the highest political levels to offer the NHS these paltry amounts. The economic policies of the 2010 and 2015 administrations have led to many cuts in funding for public services. The NHS was “protected” but only against inflation. The blame for the current state of the NHS lies firmly at the door of our politicians. This allows talk of “top-up insurance” as the answer to the NHS’s woes.
Having a budget for a package of care, say for one year’s treatment for diabetes, sounds attractive. But what happens when that money runs out? People who could afford it could top this up for extras such as diabetic retinopathy. But people with no insurance or savings would be unable to do this and lose out. We should be working hard to ensure that everyone has equal access to all the care they need.
Politicians could decide to fund the NHS adequately if they were to end their obsession with cutting public services. Governments can borrow at all-time low interest rates, and investment in healthcare has been proved good for the economy.15

Exorbitant interest payments

We should be investing in front line staff instead of “management consultants” of dubious value.16 And we should find a way to end the exorbitant £2bn a year interest payments for private finance initiatives that could be spent on caring for patients.17
Without more money we are just a short step away from the introduction of NHS health insurance or demands that the public supplement out of their own pockets. That would be a sad day for patients, and the NHS as envisaged—free for all at point of need—will be gone.


  • Competing interests: Both authors have read and understood BMJ policy on declaration of interests and declare that DW is deputy chair of BMA Council.


  1. Without more money we are just a short step away from the introduction of NHS health insurance or demands that the public supplement out of their own pockets. That would be a sad day for patients, and the NHS as envisaged—free for all at point of need—will be gone.

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