13/07/2012 11:15 BST | Updated 11/09/2012 10:12 BST

Can the NHS in Wales Continue In Its Present Form?

The on-going row over the report into the Welsh NHS, by Marcus Longley, brings the future of the NHS in Wales, once more, into the public spotlight. Although the report covers many important issues, perhaps the critical issue not considered is whether the NHS in Wales can continue in its present form, in the long term, of being free at the point of consumption and funded from the proceeds of taxation. This may seem a heretical question to ask but asking it must be done.

When the NHS was created in 1948 it was the jewel in the crown of the post-War Labour Government. Since that time many people, especially in Wales, have continued to see it as a beacon of civilised society where health care is free at the point of consumption and where access to health care is largely based on clinical need and not ability to pay. Thus the NHS contrasts very positively with other healthcare systems, most notable the USA, where 15% of the population are uninsured and a further 35% are underinsured or fear losing their health insurance. The issues facing the future of "Obamacare" in the USA suggests that these problems will still remain unresolved.

However, the success story of the NHS often blinds us from considering whether it can continue unchanged into the future particularly with regard to it being a public service funded almost entirely from the proceeds of taxation. The "founder" of the NHS, Aneurin Bevan, is often quoted as stating his expectation that once the NHS was founded and people's health status improved that NHS expenditure would fall. Clearly this is not the case and NHS expenditure has grown enormously over a sixty year period. While we may now look back on Bevan's comments as naïve, we must remember that he couldn't have anticipated the impact of: artificial joint replacements, organ transplants, high technology diagnostic equipment, highly complex and expensive cancer drugs, genetic screening and therapies or the impact of people adopting very unhealthy lifestyles and risk behaviours.

In 2002, Sir Derek Wanless prepared a number of reports which considered whether the NHS could continue to be provided from the proceeds general taxation. One of these reports was prepared for the Welsh Assembly Government on the future of health and social care in Wales. Wanless outlined three main future scenarios for the NHS involving different levels of funding growth for the NHS. The most ambitious scenario involving the lowest (but still high) level of growth in NHS funding required major improvements in NHS productivity and a major change in population lifestyles and an acceptance that people should take increased responsibility for their own health. Wanless subsequently concluded that the NHS should continue to be funded from general taxation albeit at higher levels. Unfortunately over the decade since Wanless, NHS productivity has declined and only limited progress has been made in relation to population attitudes to their own health. Many would argue that we have failed to achieve the least ambitious Wanless scenario let alone the most ambitious.

Let's fast forward to 2012 and see where we are now. Firstly, the demands for NHS services are estimated to grow at 4-5% per annum as a consequence of population ageing, medical science developments etc. Secondly, many people in Wales still have extremely unhealthy lifestyles which they seem unwilling to change and which have long term health implications for them and the NHS. Thirdly, the state of UK economy (which generates the tax revenues to pay for public services like the NHS) is in the doldrums with little likelihood of there being significant economic growth in the near future and so the scope for additional funding through economic growth is virtually nil. Fourthly, like the rest of the UK, public services in Wales (including the NHS) face ongoing cuts in public spending for many years to come and this will impact on the NHS Wales. The Welsh Audit Office estimates that there will be a funding gap (i.e. the difference between what NHS Wales would need to stand still, and what it will actually receive) of between £252m and £445m by 2013/14.

Moreover, it is important to emphasise that the current situation is not one which will resolve itself next year or the year after. All the indicators are that public services in Wales and the rest of the UK will be facing financial austerity for many years to come. Recently the UK Cabinet Secretary, Sir Jeremy Heywood, was quoted as saying that the cuts in public expenditure will last for ten years! - Wales cannot not be immune from this situation however much we might like to be.

In the light of these circumstances and the early lessons from Bevan and Wanless surely we have to ask the almost heretical question as to whether the NHS in Wales can continue to be free at the point of consumption and funded almost solely from general taxation and if so what are the alternatives.

Two approaches to bridging the funding gap in NHS Wales are usually put forward and these can be summarised below_

• Improved Efficiency - improving efficiency is the favourite remedy of politicians who seem to believe it is easy to do and a panacea for everything. If it was that easy it would have already have been done. In reality the NHS in Wales has made some efficiency savings for many years but these have been delivered during a period of financial growth where the efficiency savings could be seen as a self-generated top-up to the increased level of funding given to the NHS. The level of efficiency savings that would now need to be generated in the Welsh NHS to close the current funding gap is unachievable and if politicians say it can be done you shouldn't believe them. Think of the oil tanker analogy. The NHS is an organisation which over the last sixty years has got used to receiving large (or in some years, very large) amounts of additional funding each year. It is now faced with sharp reductions in funding - an unprecedented situation. Politically, culturally and organisationally the NHS in Wales is such that it is not now going to turn itself into a lean mean machine delivering high quality (and sometimes not so high quality) health care at vastly reduced cost. The changes needed to achieve this are politically unacceptable. Moreover, in Wales, the challenges are doubly difficult because policies such as competition are not even to be considered on ideological grounds.

• Service Reconfiguration - the Longley Report referred to above is largely about the need for reconfiguration of health services in Wales. The report makes a strong case for reconfiguration in a number of clinical areas in order to meet the vast challenges of the future. However, whatever its merits, the report is not claiming that reconfiguration will deal with the financial challenges facing the Welsh NHS. It actually states that the evidence on costs of hospital re-configuration is not conclusive: sometimes it saves money, sometimes it is cost neutral, and sometimes it increases cost. Hardly a solution to the financial hole the NHS Wales finds itself in.

If the above options are unlikely to solve the financial problems what other alternatives are available. There seem to be two main contenders:

• User Charges - The NHS already levies a number of different charges which are small in scope and revenue, and in Wales the range and scope of these charges is less than in England. One policy option is to increase the range and scale of user charges in the NHS in order to raise more revenue. Even in the socialist havens of Scandinavia there a number of patient related charges which are accepted by the population as being fair and which raise revenue. The health policy group, "Doctors for Reform" have argued that many NHS patients are already routinely seeking paid options to top-up their NHS entitlement, in order to access new kinds of care, faster access and higher quality. Thus the service can no longer be regarded as free at the point of consumption for everyone. They subsequently argue that the incidence of such co-payments is so haphazard and inequitable to the poor that it would be better to address the issue head on and introduce a more uniform and fairer approach to top-up payments for all patients.

• Health insurance - a yet more radical option would be to restructure NHS finance completely and move towards some form of a health insurance model where people (or the government in some cases) would pay monthly insurance premiums. In line with the principles of insurance, premiums could be linked to risk such that people adopting unhealthy lifestyles would pay more thus providing a financial disincentive to such behaviours. Whenever the issue of health insurance models are discussed many people throw up their hands in horror and talk about the USA and how bad its health system is (which it is) while ignoring the fact that many European countries operate perfectly good health insurance models for funding health services. There are many different models available which take account of matters such as health care for the poor.

At the end of the day politicians and health professions are likely to throw up their hands in horror at these alternatives and say something like "over our dead body". The problem is that if something isn't done soon and the issues are not faced up to (rather than waiting for something to turn up) then in 5-6 year's time it could be somebody else's bodies that will be dying because of lack of health service funding.

Can the NHS continue to be free at the point of consumption and funded from the proceeds of taxation - I don't think so?