Memorandum submitted by the Social Market
Foundation (CP 33)
INTRODUCTION
The Social Market Foundation is an independent
public policy think tank established in 1989 to provide a source
of innovative economic and social policy ideas. Steering an independent
course between political parties the SMF has been an influential
voice in recent health, education, welfare and pensions policy
reform. Our current work reflects a commitment to understanding
how individuals, society and the state can work together to achieve
the common goal of creating a just and free society.
The Social Market Foundation set up a Health Commission
in July 2002 to look at healthcare funding. [81]As
part of its deliberations it published reports on current charges
in the NHS and the potential for, and desirability of, increasing
user charges in health care. [82]A
further publication on the wider use of co-payment in public services
is due to be published shortly. [83]Responses
to the following questions mainly draw on these documents.
Question 1
(a) Whether charges for treatments, including
prescriptions, dentistry and optical services are equitable and
appropriate?
Prescriptions
The SMF's Health Commission concluded that scrapping
prescription charges altogether could lead to unnecessary demand
for medicines which would increase the NHS bill. Moreover, the
NHS would lose a substantial income of more than £400 million.
It was felt however, that the current arrangements for prescription
charges were illogical, unfair and inequitable for some groups,
and therefore ought to be reformed.
The most obvious area of unfairness is in relation
to exemptions from payment for people with certain chronic conditions.
There seems to be no clear rationale for exempting people with
diabetes for example from payment, while people with asthma have
to pay for life-saving medication. The SMF Health Commission proposed
a new system for prescription charges which would link the charge
to the therapeutic value of the medicine. This would mean chronic
conditions that are currently not included in the list of exemptions
would attract lower cost-sharing rates, even down to 0%.
Another group which is affected by prescription charges
is those on low incomes just above the threshold for help. This
group is hit with a double-whammy—they do not qualify for
the exemptions (because they are not receiving benefits) and yet
they suffer a greater likelihood of becoming ill as compared to
people with higher incomes. There is evidence that people on lower
incomes delay or forgo their prescription medicines. For example,
a survey by NACAB suggests that around 750,000 people in England
and Wales fail to take up their prescription because of cost.
[84]This
can lead to further health costs down the line as patients' conditions
worsen and need more expensive treatment. The SMF Health Commission
proposed the introduction of an annual limit on the amount an
individual should pay on prescription charges which would replace
the current season ticket arrangements. The Commission considered
the need for tapered help for people on low incomes just outside
the threshold for exemption, but rejected it on the grounds of
increased administration costs.
The inequities in the current system of prescription
charges are further compounded by exempting older people and expectant
or new mothers from charges, even when they could afford to pay
them. The BMA has argued, for example, that there is no need to
exempt women from prescription charges in the year following childbirth,
because the medical problems that used to occur in the twelve
months after birth are much less common now. [85]Older
people who can afford it are expected to pay a proportion towards
the costs of their social care, so it seems illogical that prescription
costs are excluded. The SMF Health Commission proposed scrapping
the automatic exemption for pregnant women, nursing mothers or
older people, and that free prescriptions should be provided free
to children and others only on the basis of low income.
Dentistry
The current system of charges for dentistry
is widely considered to be confusing and inefficient. There are
too many charges for NHS treatment, and a lack of awareness among
patients that they are required to pay 80% of the cost. Moreover,
there are concerns that the piecework system creates incentives
to over-treat patients, wasting NHS funds. The SMF Health Commission
proposed that there should be a greater focus on prevention, and
that treatments that qualify for NHS funds should do so according
to clinical effectiveness. Treatments that are not essential to
treat a medical condition should therefore be subject to full
cost recovery. The Commission's favoured approach was for the
NHS to pay for everyone to have free check-ups, though at longer
intervals than is currently the case. It was felt that greater
use should be made of dental capitation schemes to cover the costs
of treatment, and that the government should consider arrangements
to cover some or all of the costs of enrolment in a capitation
scheme for people on low incomes.
Optical charges
As with other charges, there is evidence that
optical charges discourage take-up of services. However, the situation
is complex, because even groups which are eligible for free eye
tests (the over 60s for example) appear not to be utilising the
opportunity which suggests that something else, potentially the
cost of glasses, is acting as a disincentive. The optical market
is complicated by the fact that it is dominated by designer brands
which is not the case with other physical aids, and this can leave
the consumer vulnerable. The SMF Health Commission's approach
was to emphasise prevention. It proposed that sight tests should
be made free to everyone to encourage early diagnosis and treatment,
with the increased costs to be partially offset against the savings
from preventing advanced eye disease. The Commission also proposed
that vouchers for people on low incomes to pay for glasses should
reflect the real costs of glasses, and that glasses within the
value of NHS vouchers should be available from all optometrists
participating in the scheme.
(b) Whether charges for hospital services
(such as telephone and TV use and car parking) are equitable and
appropriate?
There is much evidence that charges for car parking
and travel do put people off seeking healthcare and once again
there is much confusion about eligibility for reimbursements.
[86]The
SMF Health Commission proposed that help with the costs of travel
should be provided on the basis of low income only. It was also
suggested that people who are eligible for help with the costs
of travel to hospital should also be given help with travel to
other NHS services such as GP and dental surgeries.
The Commission did not believe there was a problem
with charging for non-clinical services, such as for TV use, from
an equity perspective, but information about such charges should
be made more available to patients before their hospital stay.
Question 2
What is the optimal level of charges?
The optimal level of a charge depends on many factors
including the purpose of the charge (eg to reduce demand on a
particular service, or to increase revenue), equity considerations,
and public acceptability. In general, clinical services ought
to attract very few charges and those that do must have sufficient
exemptions to ensure that those on low incomes are able to access
services. Charges should not be relied upon to form a substantial
part of health service funding. Even countries which have much
higher levels of co-payment in healthcare, only raise around 10-20%
of income from charges with the rest generated through taxation
or social insurance. Moreover, the amount raised through a charge
will always be reduced through exemptions and the costs of administering
the charge. As has already been shown, some charges actually increase
costs to the NHS in the long-term because they dissuade patients
from accessing treatment which results in higher costs of treatment
further down the line. Assumptions, therefore, that more charges
will result in increased revenue must be treated with caution.
Question 3
Whether the system of charges is sufficiently transparent?
Most systems of charges are complex and widely disliked
by patients. The illogical nature of some charges such as prescriptions
means that people do not view them as fair. The flat rate of prescription
charges, for example, gives no indication of the true cost, or
more importantly the therapeutic value, of drugs. In some cases
this can be overcome by developing a clearer rationale for the
charge with exemptions based on whether the charge is unduly hindering
access to the service, rather than on historical precedent. In
most cases charges, along with their exemption criteria, should
be better advertised to the public.
Question 4
What criteria should determine who should pay and
who should be exempt?
Exemption criteria should be strongly linked to principles
of equitable access to health services. In our opinion, this means
that generally people on lower incomes and children should be
exempt from charges, while everyone else should be expected to
pay, including older people on higher incomes. Another important
consideration is whether the charge negatively impacts on the
general objective of a healthier society. We would argue that
some charges (such as for eye tests) work against the preventative
approach, and therefore should be abolished. Similarly, our suggestions
for linking the amount that patients pay for prescriptions to
the efficacy of the treatment ensures that those people who need
vital medicines to treat chronic diseases will be eligible for
free treatment. This will reduce costs in the longer term because
more people with those conditions will take-up the treatment they
need.
Question 5
How should relevant patients be made more aware of
their eligibility for exemption from charges?
All health professionals should be more active in
promoting the exemption criteria to their patients, but patient
groups can also play an important role in informing their members
of their rights. The Expert Patient Programme could also do more
to inform patients of their right to exemptions from charges.
Question 6
Whether charges should be abolished?
Charges provide a necessary function in increasing
health service revenue and ensuring that some health services
are used efficiently by reducing demand. In the absence of direct
prices, a situation of "moral hazard" may develop where
patients use health care unnecessarily thereby increasing costs
for the NHS. This could be compounded by "supplier induced
demand" in situations where doctors or others rely directly
on attracting business to generate their income. Charges help
to send signals to patients about the costs of healthcare and
make them consider their use of services more carefully.
Many health charges in England, however, suffer from
a lack of clear rationale and in some cases work against wider
health objectives. We suggest that in most cases charges need
not be abolished, but should be rationalised to better help people
on low incomes or with chronic conditions, to link charges to
the value or benefit of the treatment or service, to encourage
a preventative approach if possible, and to simplify the system
of exemptions. Moreover, we would urge that issues of equity and
take-up of essential care must be at the forefront of policy-maker's
minds when considering the introduction of any new charges for
health services.
Jessica Asato
Social Market Foundation
12 December 2005
81 The members of the SMF Health Commission included:
Lord David Lipsey (Chair); Rabbi Julia Neuberger; Professor Ray
Robinson; Dr Chai Patel CBE; Dr Bill Robinson; and Fergus Kee. Back
82
See A Fairer Prescription for NHS charges: The Social
Market Foundation Health Commission Report 1 (June 2003) and User
Charges for Health Care: The Social Market Foundation Health Commission
Report 2D (September 2004). Back
83
Charging Ahead? The use of co-payments in UK public services
(forthcoming January 2005), Ed. Jessica Asato. Back
84
National Association of Citizens Advice Bureaux (2001), Unhealthy
Charges: CAB evidence of the impact of health charges. Back
85
British Medical Association (2002) Funding-prescription charges. Back
86
Social Exclusion Unit, (2003), Making the Connections: Final
Report on Transport and Social Exclusion. Back
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