Myth busting: NHS not so efficient after all

The NHS has long coasted on the widely held belief that it is one of the best healthcare systems in the world because it is so efficient. While European systems boast better patient outcomes, and the United States points to its excellent pre-emptive care measures, NHS loyalists cast that all aside, because unlike any of those other countries, the UK is able to keep its healthcare spending below 10% of GDP, free at the point of use, with relatively good outcomes. No other country can beat that efficiency. Well, it turns out most of them do.

In 2010, the OECD published multiple papers that specifically looked at the efficiencies of different health care systems. In its report “Health care systems: getting more value for money”, the OECD found that there was “room in all countries surveyed to improve the effectiveness of their health care spending.” Some countries, however, could see significant efficiencies gained. And the top three countries that could benefit the most: Greece, Ireland, and the United Kingdom.

By improving the efficiency of the health system, public spending savings would be large as compared to a no-policy-change scenario, amounting to almost 2% of 2017 GDP on average in the OECD. It would be over 3% for Greece, Ireland and the United Kingdom.

Breaking with myth, the UK is one of the countries that could do the most to improve its efficiency in public healthcare spending. Even more than the United States.

What the loyalists don’t seem to realise is that efficiency can’t simply be determined by how much money a country puts towards healthcare. The real question is how efficiently those monetary resources are being used to obtain better health outcomes.

And according to the OECD, both the UK and the US still have a long way to go:

Australia, Iceland, Japan, Korea and Switzerland perform best in transforming spending into health outcomes

In more than one third of OECD countries, exploiting efficiency gains in the health care sector would allow improving health outcomes as much as over the previous decade while keeping spending constant (Figure 2, Panel B). Germany, the United Kingdom and the United States fall into this group.

I’m not predicting the end of this health care tale. Perhaps, if the right reforms were made to the NHS to drastically improve efficiencies, the UK would have a system that not only demands less public spending, but also creates better health outcomes too. To compare apples with apples, Norwegian healthcare is " is mainly provided by a heavily regulated public system, with strict gate-keeping" and grouped together with the UK in the OECD's categorisations for healthcare systems; yet Norway's system is ranked much better for efficiency (more details to come in next blog...).

I just thought I'd flag up that, as things stand, the NHS under-performs on just about everything that matters.

The starting point in the immigration debate

At the Telegraph, Conservative MP Gavin Barwell says what for many Conservatives is the unsayable: that immigration is great for the economy:

Last week, the Organisation for Economic Co-operation & Development published a report which showed that immigration makes a positive contribution to the public finances of many countries, including the UK. Yes, you read that right: migrants in the UK pay more in tax than they consume in public services (that’s not true of every migrant of course, but collectively they make a net contribution). Without them, we would have to make further cuts to public services or pay higher taxes or both. . . .

We have to find a way to earn a living in an increasingly competitive world. Allowing the best and the brightest from around the world to come and study and work here can help us do that. So yes let’s make sure we have control of our borders, yes let’s tackle abuse, yes let’s talk about how many people and who we should allow to move here – but don’t let’s delude ourselves that immigration is always bad news.

And that's the point. The one point I disagree with Barwell on is when he says that "nobody is claiming immigration significantly increases" GDP per capita. Well, I am. Letting immigrants locate in rich countries deepens the potential division of labour: hiring a Tanzanian accountant to look after my firm's finances instead of doing them myself frees me up to focus on whatever I'm best at.

That minor quibble aside, I'm delighted that Mr Barwell has decided to be brave about immigration policy. While there are legitimate debates to be had about access to public services and social cohesion, the starting-point in any discussion about restricting immigration should be that restrictions make us poorer.