Select Committee on Health Third Report



11. Health charges for prescriptions, dental care and visual aids have been in place for almost as long as the NHS itself. The legislation needed for the introduction of health charges was passed in 1949 for prescriptions and 1951 for dental and ophthalmic services. Charging for prescriptions, dental services and spectacles began in 1952.[10] Prescription charges were abolished in 1965, but re-introduced in 1968, when there was also Treasury support for a GP consultation fee.[11] In 1968, a list of medical exemptions to the prescription charge was drawn up.[12] No systematic review of this list has taken place since its compilation. Box 1 contains a brief history of NHS Charges.

12. Several reviews have examined health charges, including the 1953 Guillebaud Committee of Enquiry into the cost of the NHS, our predecessor Committee's 1994 report on Priority setting in the NHS: the NHS drugs budget and the Comprehensive Spending Review of 1998. There have also been studies by think tanks and other organisations.[13] The Comprehensive Spending Review of 1998 examined alternatives to the current system of health charges, and the savings/costs they would entail. The alternatives considered included a reduced prescription fee with fewer exemptions,[14] charges for pensioners with income above a certain level, free dental checks for the over-60s and free sight tests for all.[15] It was decided to leave the system unchanged, although the reasons for this were not clarified in the written evidence we received. The Minister stated:

    We were not the first government to have done that: since [charges] were introduced, they have been looked at many times, and on each occasion it has been concluded that, whilst there are anomalies in the system—and we accept that—the system we have is probably best left as it is.[16]


13. What should be provided free within healthcare and what should be available for a fee has been continuously debated since the introduction of charges in the early 1950s. There has been extensive discussion of the services that the NHS should provide. Rationing is already common: many Primary Care Trusts (PCTs) meet the cost of only one cycle of in-vitro fertilisation (IVF) treatment, for example, and eligibility criteria vary.[17] The provision of Herceptin, the newly licensed, expensive medicine for early stage breast cancer, by individual PCTs has been a recent topic of debate. Whether the NHS should extend its screening programme to include other diseases has also been discussed.[18] Underpinning such rationing are considerations of the types of care designated as 'essential'. As people's expectations of life in general, and healthcare in particular, rise, it is perhaps increasingly difficult to differentiate between essential care and non-essential treatments.

14. The purpose of charges is twofold. They were introduced in the late 1940s and 50s both to raise money and to reduce demand. The then Prime Minister, Mr Attlee, justified the legislation on prescription charges in 1949 as a means of reducing unnecessary use of doctors' and pharmacists' time, "as a deterrence against extravagance, rather than as an economy".[19] The introduction of dental and sight test charges had less to do with health policy than with the need to pay for rearmament prior to the Korean War.[20] Professor Peter Smith of York University stated:

    User charges in health care have two broad roles: to raise finance for the health system, and to send signals to patients who would otherwise face a zero price for access to health care.[21]

15. Although one of the purposes of charges is to raise funds, Governments have never set a target to obtain a particular proportion of the health budget from them. At present charges for prescriptions and dentistry amount to just over 1% of the total NHS budget.[22]

16. The signals sent by charges indicate to patients that the goods or services they receive are not without value and therefore should not be over-used. They could be used to discourage the wrong sort of behaviour; for example, patients could be charged for non-attendance for appointments. As we have seen, Attlee believed that prescription charges would reduce unnecessary demand for drugs.

17. The need to raise funds can send signals which discourage best practice, however. The charges for prescriptions for hospital day-case patients but not for inpatients are inconsistent with the desirable switch from inpatient to community based care.

18. It is desirable both that fees should be set at a level which does not deter patients from seeking or obtaining essential care and that exemption systems are in place to protect those on low incomes. Therefore the level of fees and the exemptions should ensure that medicines and services can be used by everyone when necessary but not used when other courses of action are more appropriate.

19. The subject of exemptions raises many questions. If the purpose of exemptions is to ensure that everyone gets the treatment they need, should exemptions policy be designed specifically to achieve this? For example, should there continue to be exemptions based on age alone rather than income?

20. The charges currently levied by the NHS may lower demand in that they reduce the numbers of patients obtaining their medicines and visiting a dentist; unfortunately, on the other hand, they may also stop patients from visiting their doctor, pharmacist or dentist whenever they need care. If this occurs, patients' health may suffer.

21. The evidence of the effects of reduced demand associated with charges is of two main kinds: the first consists of studies in which a population was observed before and after the imposition of a charging regime. Much of this controlled research was performed overseas. An experiment carried out in the US in the 1970s by the RAND group, in which over 2,000 patients were assigned to one of four types of charging regime, showed that increasing charges resulted in consistently reduced use of healthcare services, with associated cost savings and minimal health effects on most of the socio-economic groups included. However, the study also showed a seriously adverse effect on the health outcomes of those with low-incomes who had chronic illnesses. The annual risk of death related to hypertension, for example, was 10% greater in this group.[23]

22. The English evidence is largely of the second type which consists of surveys and focus group work. A telephone survey of patients from five countries including the UK concluded that of individuals on "low incomes" in the UK 6% did not obtain medicines after being issued with a prescription, or complete courses of prescribed drugs due to cost, and 24% did not consult a dentist for financial reasons.[24] There is also the testimony of organisations which work with individuals who have problems paying charges, such as Citizens Advice. They told us that they had seen, "people driven to below poverty level"[25] by health charges. Difficulties increase when such individuals are the victims of long-term illness:

    From our point of view it is a combination of people's chronic health problems and low income. It is when those two things butt up against each other, that is the client group that we find most often has problems with prescription charges.[26]

23. Such evidence, like the evidence of surveys, does not provide a firm basis for conclusions that can be generalised to a large population. The English evidence base is very small and the effects of charges in this country have not been systematically assessed. Nevertheless, the general gist of the evidence is clear. As Professor Donald Light informed us, charges have adverse effects on the use of services, and this conclusion is supported by all the available international evidence.[27] This is also the conclusion of the WHO, which has stressed that charges deter use of services by the poorest and sickest in a population.[28]

24. It appears difficult to protect vulnerable groups that need effective and accessible healthcare but are less likely to seek it, while limiting "unnecessary" demand among other, usually wealthier and healthier groups, which might overuse services. Charges do not readily differentiate between frivolous, necessary and unnecessary use of services—as a result, they are a blunt instrument and are likely to have negative effects on access to and use of services. Professor Peter Smith told us:

    Unless carefully designed, user charges designed to curb excessive demand amongst the bulk of the population could have ruinous financial or health consequences for a relatively small number of poor people with health problems.[29]

25. Much of the debate about charges has focussed on prescription medicines and dental and optical services, but there are other costs involved in accessing healthcare, notably car parking, and the introduction of new services to hospitals such as bedside telephones.[30] We are considering them here because there is growing evidence that these are of concern to many patients. Car parking charges have become more important as changing medical practice means that many patients have to attend hospital more often as day cases, while bedside telephones are a recent development.

26. Below we discuss the charges for elements of clinical care, namely medicines, dentistry and sight tests. This is followed by an examination of charges for services provided by hospitals that do not form part of clinical patient care, including charges for bedside telecommunication and car parking.

10   A prescription charge of 1 shilling per form was first introduced. Four years later, a charge per item contained on the form was introduced Back

11   Eversley 2001. Contemporary British History; 15: 53-75 Back

12   See Chapter 4 for the list of medical exemptions Back

13   Eg. Social Market Foundation, 2003, A fairer prescription for NHS charges. National Consumer Council, 2003, Creeping charges: NHS prescription, dental and optical charges-an urgent case for treatment. Citizens Advice, 2001, Unhealthy charges.  Back

14   With no exemptions, a flat rate of £1 per item with no exemptions would save £120 million; a £2 charge per item would produce income of £410 million. A flat rate charge of £4 with exemptions for all children up to age 18 and low income groups, but without automatic exemptions for other groups would produce additional income for the NHS of around £250 million a year. See Ev 106 Volume III Back

15   Free dental checks for the over-60s and eye tests for all would entail costs of £20 million and £120 million each year, respectively. See Ev 107 Volume III for more details Back

16   Q 562 [Jane Kennedy] Back

17   See the Human Fertilisation and Embryology Association,  Back

18   Eg. to include certain types of cancer. See Population screening and genetic testing, BMA August 2005  Back

19   Webster 1996. Cited in Eversley 2001, Contemporary British History; 15: 53-75 Back

20   Ibid  Back

21   Ev 155 Volume III Back

22   See Chapter 3 for amounts raised by charges Back

23   RAND's Health Insurance Experiment started in 1971 and lasted 15 years. It is the largest health policy study ever conducted. Details can be found in Keeler EB, Effects of Cost Sharing on Use of Medical Services and Health. Journal of Medical Practice Management, 1992, 8: 317-321 Back

24   Commonwealth International Health Policy Survey 2004 (covering Australia, Canada, New Zealand, United Kingdom and United States) This was a telephone survey of between 1,400 and over 3,000 patients from each country. Cited in Ev 86 Volume II Back

25   Q 253 Back

26   Q 218 Back

27   Ev 94 Volume II Back

28   Cited in Eversley 2001, Contemporary British History; 15: 53-75 (p 54) Back

29   Ev 157 Volume III Back

30   Parking charges have been in place for many years at some hospitals. Chargeable bedside entertainment services have been available in some hospitals since 2004 Back

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