Opinion: NHS Funding – There Is A Better Alternative

Published on: 13 Sep, 2018
Updated on: 14 Sep, 2018

Are we too ideologically attached to our free health system to see the advantages of alternatives – namely a hypothecated or ring fenced tax system?

Student reporter Laura Nuehaus, in her third and final opinion piece for The Guildford Dragon gives her answer…

By Laura Neuhaus

Every British woman and man seems proud to defend the NHS and its free health care for all, despite the financial trouble that has come with it.

Having grown up in Germany, I always found it confusing when people here would assume that every other system involved leaving the poor to die if they couldn’t afford to pay a doctor. There are many viable alternative systems that ensure the whole population receives fair healthcare, we are just not prepared to see them.

I want to focus particularly on one aspect of the German system that I think could make a great difference to the NHS’ financial deficit: the hypothecated, or ring fenced, tax.

Laura Neuhaus, student reporter with the Guildford Dragon NEWS

In Germany, every citizen by law must have health insurance. The payment rate is around 8% of your income, varying slightly between insurance companies. If, however, you have no income or cannot afford to pay, the government will pay for you.

The significant difference between the German and the English system is that the German citizen pays a separate body for their healthcare, which means the government does not have access to that money. The full 8% paid for health care will go to healthcare only.

To illustrate the difference ring fencing our health care tax could make, I have compared the annual figures from the Guildford and Waverley Clinical Commissioning Group (CCG) , who is responsible for reporting on health care in our area, with the German insurance company HKK.

Here’s what I found:

The Guildford and Waverley CCG received £987 per person from the government for health costs.

The German Insurance company HKK received €2,496 per person from their insurance intake for health costs.

This means that the HKK had roughly 2.3 times more money per person than the CCG (£2,248 compared to £987).

In England, the taxpayer will pay 12% of their income towards the national insurance contribution, which includes state pension, unemployment cover, care insurance and health insurance.

In Germany, these taxes are separate. In total, the taxpayer pays about 20.5% of their income in these separate taxes. However, a ringfenced 8% of this goes to health insurance, separately, and the German taxpayer does pay 1.7 times more towards healthcare than the English taxpayer fo national insurance.

But for that extra 70% paid by a German he or she gets another 130% in health spending: so, a bigger “bang for buck” because money is not siphoned off for other purposes.

The government in England is able to spend, as they wish, the 12% insurance contributions we pay, and at the moment, in comparison to Germany, the government is leaving a smaller proportion for healthcare.

I think this is a clear argument for having a hypothecated tax, especially considering that our local CCG has a deficit of £10.2 million and the German HKK company had a surplus of €56.2 million (they cover about twice as many members as the CCG).

Surely it is worth reforming the way in which we pay tax and ring fence the money used for health care. We would still have our free healthcare system, but we would also be protecting it.

Figures are taken from:

The Guildford and Waverly Annual Report 2017/18 – http://www.guildfordandwaverleyccg.nhs.uk/documents.aspx?t=1

The HKK’s Annual Report 2017 (Geschäftsbericht) – https://www.hkk.de/ueber-uns/geschaeftsberichte

Responses to Opinion: NHS Funding – There Is A Better Alternative

Valerie Thompson Reply

September 13, 2018 at 8:52 am

Another simple way of raising money, by which each hospital could benefit would be to charge for “bed and board”. £10 per day per patient (except those on benefits) to pay for food, laundry and cleaning would help. Surely this is not too difficult to organise and does not break the basic regulations of free medical care.
John Hawthorne Reply

September 14, 2018 at 8:59 am

A lot of children want to get into medicine and health and I think, because of this, perhaps “health” should be added to the national curriculum at GCSE level. Lots of kids would like to be doctors, nurses, physiotherapists, nutritionists or paramedics. We already have Sports GCSE and A-levels, isn’t time we had Health GCSE and A-levels?

This sounds off topic but in fact, the nation would need the NHS less if more individuals were taught more about health right up to A-level standard. Funding might then become less critical.