August 24, 2009

August 24, 2009 | Commentary on Health Care

Britain's Sacred Cow: The NHS and Daniel Hannan

Daniel Hannan is in trouble. The young Tory European MP, who became a YouTube sensation earlier this year for his denunciation of British Prime Minister Gordon Brown as the "devalued prime minister of a devalued government," has made what can in politics be a serious error: he has challenged orthodoxy in a way that is both substantive and interesting. Boring substantive challenges can be seen off, and soaring rhetoric that says nothing is the stuff of politics, but having a point and knowing how to make it will always raise bellows from the defenders of the gored sacred cow.

The curious thing in this instance is who is doing the bellowing. Hannan has achieved the impossible: he's brought Gordon Brown's backers and the Conservative Party into harmony. Health Secretary Andy Burnham described Hannan as "unpatriotic": it's curious how dissent is only the highest form of patriotism when it comes from the left. Lord Peter Mandelson, the First Secretary of State, claimed that the British people would find Hannan's remarks "shocking." If so, they must have very short memories or very low standards: Mandelson, known as the "Prince of Darkness," has been forced out of the government twice in the past eleven years on ethics charges. For his part, David Cameron, the Leader of the Conservative Party, described Hannan as an eccentric, and the Leader of the Conservative group in the European Parliament, Timothy Kirkhope told the BBC that Hannan should be disciplined for his comments.

Hannan's error was to step boldly and simultaneously into two ongoing battles, with the result that he was hit by the cross-fire. The battle in the U.S., to which Hannan thought he was contributing, is the one over health care. Hannan is a vehement opponent of Britain's National Health Service - which he describes as a "60-year failure" that he "wouldn't wish on anybody" - and a supporter of U.S.-style health savings accounts. As the NHS is the single-payer system to end all single-payer systems, and as it is one of the two foreign health care systems that Americans have heard of - the other being Canada's - its deficiencies are potent fodder for opponents of what President Obama is pleased to call health care 'reform' in the U.S.

The other battle is the one in Britain between the Tories and Labour. There, both parties are competing for the title of who can praise the NHS the loudest. Brown's claim is strong: he has increased spending on health care since 1999/00 by over 50% in real terms. The results, charitably, have been modest: much of the increased spending has been swallowed up by cost pressures and the advancing bureaucratic legions inside the system. Britain's Office of National Statistics has found that productivity across government as a whole slumped as more money was spent: as the NHS got an outsized budget boost, it turned in a particularly dismal performance. Labour's error was to believe its own propaganda that the NHS was suffering from heartless Tory budget cuts, and that the solution was more money combined with more top-down control. The latter absorbed the former, and by the end of his tenure in Downing Street, Tony Blair was returning to Tory-style reforms in an effort to contain the exploding costs.

It's those costs, and the lingering potency of the claim that the Tories want to destroy the NHS, that gave the Conservatives both their political opportunity and their political strategy. After the Conservatives lost the 2005 election under the leadership of Michael Howard, Cameron concluded that the Tories had to return to the legacy of One Nation conservatism that exemplified the career of Harold Macmillan and, in his post-war tenure, Winston Churchill. The essence of One Nation conservatism, at least after 1945, was its unwillingness to fundamentally challenge to the post-war domestic status quo established by Labour.

In the end, that was what destroyed it. The post-war world was not forever, and many policies that seemed correct - or at least sustainable - in the two decades after 1945 had become dangerous irrelevancies by 1979. Appropriately, Macmillan ended his career as a bitter critic of Margaret Thatcher's denationalizations, as if the tattered and ineptly run industries the British government clung to were really the valuable family heirlooms of his imagination.

The new One Nation vision substitutes New Labour for the Labour Party of the post-1945 era. The problem is that, so far, it has not addressed the actual deficiencies in New Labour's agenda, just as post-war conservatism proved unable to take Labour's program and make it work. The problem with the nationalized industries, for example, was simply that they were expected to provide more public services - in particular, jobs for union members - than their steadily shrinking productivity could justify. The NHS faced the same dilemma from the very beginning: the British public then, like a substantial part of the American public today, wanted to consume more health than it was willing to pay for. The NHS was launched in 1948 by proposals which estimated it would cost 145 million pounds per year. By the end of the first eight months, the NHS's annual cost was 295 million pounds. By mid-1950, experts were anticipating that the bill for 1950-1 would be 426 million pounds.

From the start, the NHS was thus pulled terribly and constantly in two directions at once: it had destroyed the variegated system of charities and insurance schemes that the continent's post-war systems, by contrast, sought to supplement, so it had to pay for everything. But somehow it had to constrain costs too. In 1951, the creator of the NHS, Aneurin Bevan, resigned from his position as Minister of Labour when the Chancellor of the Exchequer, Hugh Gaitskell, introduced prescription charges for glasses and dental care. According to Bevan, this violated the essence of the system, which was that it was free: "A free health service is pure Socialism and as such it is opposed to the hedonism of capitalist society." Or, as he put it in his speech to the Labour Party in 1943, the welfare state was "a social experiment" that would allow Britain to "assert a moral leadership which will have consequences in every sphere of her activities."

Of course, the service was not genuinely free: nothing of value is. Free, in this context, was just a synonym for a grant from the Exchequer paid out of general taxation. But for Bevan, using the power of the state to tax money away from the men and women who had earned it had a morality that actually earning money in the first place could never possess. The crucial consideration to him was that, once the NHS was in place, the old shame inherent in accepting public handouts would be abolished, because everyone - bared from the hedonistic pleasure inherent in writing a check to the doctor - would now be a client of the state.

But Bevan's belief that free service at the point of delivery was a matter not so much of bodily health but of moral purity exercised a continuing and malevolent influence. By turning the NHS into something resembling a religion for milk and water Marxists - which is not an unfair description of Bevan's political sensibilities - and by crushing the old system beneath the iron but faltering wheels of progress, Bevan at once committed Britain to a single payer system and made criticizing it a form of political heresy. All Gordon Brown did was to take advantage of what appeared to be one of the most prosperous periods in modern British history to remedy the deficiency that had vexed Bevan: the system could never get enough money.

As it turned out, it still can't: even as Brown blew the doors of the Treasury to pump money into the NHS, private spending on health care in Britain - there is some, in spite of the existence of the NHS - has remained steady at 1.4% of GDP. No amount of public spending appears to be sufficient to meet all needs, or to satiate the public's demand for better health, a lesson that the U.S. might take usefully to heart. The idea that instituting a British-style system in the U.S. will save money relies on the premise that Americans could be restrained from spending their own money on their own health, and would be willing to accept British levels of government-provided care. Any politician who really believes this is welcome to test the validity of their belief at the ballot box.

Indeed, Britain spends less on health than the U.S. precisely because, like any basically single payer system, the NHS ultimately has to ration what it provides to take account of the public's unwillingness to pay higher taxes, a reality that accounts for many of the NHS's failures and horror stories. The NHS's defenders have the difficult job of protecting it from the reality that Britain is no longer dominated by the old cloth-cap class system that made it so appealing in 1948: the NHS is a top-down system trying to get by in a bottom-up age. But that has not prevented British politicians on all sides from promising to try even harder and attacking the littleness of their opponents' vision. That is why Brown delights in Hannan's remarks, which give him the opportunity to demand that even meeting with foreign critics of the NHS be ruled out of bounds by all parties, and to play the old 'Tory spending cuts' card. This blissfully ignores the reality that his own Treasury has forecast massive spending cuts after he wins the next election - however unlikely that eventuality now appears - which implies that even a future Labour Prime Minister would have to continue the ceaseless struggle to reduce the cost pressures in the NHS.

The Conservatives, for their part, worry that Hannan's words will hurt them politically because, as part of their effort to compete with Brown, they have promised to ring-fence the NHS's budget when they win. This creates a tricky dilemma, because in 2007/8 spending on health (at 92.2 billion pounds) was almost 30% of the budget. It will not be easy to come close to balancing the budget - never mind achieving the surplus that Brown used to aspire to in good times - after declaring a third of spending off limits. The Conservatives are following the strategy that Blair pioneered in the mid-1990s: seize the opportunity of the recession to talk about the budget cuts that the government plans to inflict, emphasize the danger to public services, look askance at tax increases, and remain vague about how that circle can be squared. The difference is that Blair benefited from sound Tory stewardship of the economy before 1997: Cameron is not going to be so lucky. He has achieved a virtual political miracle in bringing the Tory Party back from the brink: now he will need to follow that up with a fiscal hole in one.

What does all this have to do with the health of ordinary Britons and Americans? Not much. Life expectancies in Britain keep on rising, just as they did before Brown's spending spree. The majority of uninsured Americans, whose numbers are usually exaggerated, have either decided that health insurance is a waste of their money, or rely on free emergency room care. The former strikes me, personally, as insane, and the latter is undeniably inefficient, but the supposed money-saving alternative of preventive care usually leads, the Director of the Congressional Budget Office testified last week, to higher, not lower, spending. By moving the U.S. towards a single-payer system under the guise of the public option, Obama is heading in the direction of the British system, at precisely the moment when that system, after an unprecedented injection of taxpayer money, has failed to deliver the promised results.

But then the left's demand for the single-payer system in the U.S. is not about health. It is, as it was for Bevan in 1948, about a vision of social morality, which accounts for the eagerness with which its supporters stigmatize their opponents as unpatriotic and evil. That's a curious basis, even an unhealthy one, on which to build a health care system, which one might suppose should be judged on its results. But it's an even unhealthier basis for a political system. There is no surer guarantee of fossilization, and eventual irrelevancy, than mistaking particular policies, which need to change, for immutable principles, which need not. If the British people cannot grasp the difference, Dan Hannan will be the least of their troubles.

Ted Bromund is a senior research fellow in The Margaret Thatcher Centre for Freedom at the Washington-based Heritage Foundation.

About the Author

Theodore R. Bromund, Ph.D. Senior Research Fellow in Anglo-American Relations
The Margaret Thatcher Center for Freedom

First appeared in the New Ledger