The thing is that a monolith like the NHS is a very efficient way of achieving results. It had a virtual monopoly so could buy goods and labour very cheaply. Half-baked reforms like the Internal Market have reduced this efficiency but it was still the case until the mid-2000s that we got a second-rate service for a third-rate price.
Now the price paid from the Exchequer has risen to second-rate, but the outcomes have dropped to third-rate. Maybe the old way was never sustainable, and was just living on borrowed time.
Labour is much more mobile than it used to be so the NHS now competes with foreign healthcare providers for HCPs, and as it doesn't offer competitive rates of pay it is forever shedding staff as they move abroad. This increases the training budget, as well as putting more pressure on the remaining staff who burn out and leave.
We also have the pressure of an aging population. The fallacy behind the NHS was that it would pay for itself as improvements in living conditions reduced the cost of disease. In reality as life expectancy got older they just encountered new maladies. Dementia replaced measles.
The other big cost to the Exchequer is the state pension:
In 1908 your husband (or you if you were a single woman) had to be over 70 for you to get a state pension. This was paid at 5s/week for a singleton or 7s 6d for a couple (£20 or £30 per week at current prices so even if you lived rent-free many people would not have been able to afford to eat without additional support). Life expectancy was 40 years on average so only a quarter of the population ever reached that age, and those who did were more likely to be wealthier and wouldn't therefore have been eligible as it was means-tested.
The state pension as we know it was introduced in 1948, and started at 60 for women, and 65 for men (the discrepancy purely being down to wanting couples to retire together, wives usually being younger than their husbands). Despite the lower age threshold and removal of the means testing, half of the population still weren't living long enough to claim it. The rate was set at £1 6s to begin with, equivalent to £57.66 today. Better, but still only enough to scrape a living on.
Fast forward 50 years, people are living longer (15 years past state pension age on average) and it has been recognised that the rate at which it is paid needs to be raised to actually cover the cost of living. It now stands at £185.15/week. The birth rate has declined over several decades so the cost of servicing this falls upon a much smaller tax base. Said small tax base is also paying for the healthcare burden of the aging population, which brings us back to the earlier issue.
So what can be done?
- Privatising the NHS won't save anything because it will lose the economies of scale the current system has.
- Means testing may cost more than it saves.
- People are however staying fit enough to continue working for longer, so the state pension age is going up, and should go up further to 70, with specific provision made for those who are no longer fit enough to work.
- National insurance should be absorbed into income tax, the code for the latter should be simplified to remove the loopholes and reduce administration costs.
- Inheritance Tax. Not popular but you can't take your assets with you. It's a tax that no one actually pays. Reduce the thresholds, and close some of the loopholes (the agricultural relief is important for allowing family farms to be passed down, but it also allows millionaires to have an asset they can avoid paying tax on, so put a cap on the value of land it covers).
- We need to look at what sort of services should be available for free, be prepared to make co-payments towards some things, and lose all state support for others.
- Ditch the Internal Market.