The debate in the US over the merits of socialized medicine appears to be being successfully portrayed in the rest of the world as the great majority forces of light and twentieth century social liberal ideals of care for all against a tiny minority of the forces of darkness, right wing nut-jobs who really want an agonizing death for anyone without the savings to be able to buy a heart for transplant from some Indian street urchins.

Comparisons on both sides are being made with the NHS and the Canadian systems, with the pro-Obama opinion pointing out the benefits of cradle to grave free at the point of access health care equal for all, and the anti-socialized medicine opinion pointing out the queues, the lack of choice, the fact that some people die because an available treatment is not permitted on several grounds and the total overall cost.

For those of us not politically active in the UK in the 1940s it should be a fascinating debate (if it weren't being so hideously caricatured on both sides). Because more or less ever since the National Health Service Act was passed in 1948 it seems to me that nobody has seriously challenged the NHS model, seen as it is with great "affection" as the mainstay of our post-war "enlightened" caring society. On this side of the Atlantic it seems the majority of any opinion being expressed is along the lines of cheering and celebration that what we have had for sixty years finally America is going to get and propel them into that enlightened caring society at last.

But we should take the debate much more seriously, for when the critics of socialized medicine make their case, they are, in effect, making the case against our NHS as well - highlighting potential failings that we no longer even bother looking for. First off, we should understand that the opposition is itself two separate oppositions.

In the one corner are the beneficiaries of the current, and admittedly badly broken in my opinion, system of HMO's, big pharma, heavy regulation and legal (both state and federal) protectionism that makes a few organizations and individual very wealthy but actively prevents the sort of health care we would want to see everyone able to access. But I suspect that these folk are not the sort of people many who would want to see big change in health care provision here would support.

In the other corner, and with a far more honest, sincere and coherent critique, are those who recognize that the current system is deeply flawed, expensive and exclusive, but that that is itself caused by state interference, and that actually nationalizing that system will end up even more expensive for all (though of course hidden in government rather than household or company budgets), and entrench the sort of rationing culture that is now so evident in our own NHS. The message from these people is that the solution is not to throw more regulation, more money and more centralized control at the problem, but radically to reduce the red tape and protectionist regulations at all levels - to reduce the grip of big pharma and of lobby groups, of professional accreditation bodies in whose members' interests it is to keep health care resources scarce and therefore lucrative.

And this is the side I am on. I do not want to see the NHS broken apart and true competition introduced into UK healthcare because I want to end the idea of care for all, but because as a monopoly with more or less centralized control and hence no real measures of cost effectiveness together with the fact that it is financed by taxes - a mechanism that is inherently unable to allocate resources efficiently - it is more expensive, less flexible and more exclusive than the alternatives. Bevan was reputed to have said when asked what he would do if doctors refused to join the new scheme in 1948 that he would "stuff their mouths with gold": a prediction that has embedded huge levels of economic rent in the medical professions ever since.

And so, I commend to you this piece, "Health Care: An Anarchist Approach" by Gary Chartier at the Centre for a Stateless Society which sums up well the argument of those of us, like myself, who want the state out of these sort of essential goods precisely because all they ever do is screw it all up and make things more expensive. Please go read the whole lot, but I will end with his bullet point recommendations. We still need to have this debate here.

A Sensible Policy Agenda

Bottom line: the thing government officials could do to reduce health care costs would be to get out of the way. They could:

1. Stop offering protection to patents and copyrights.
2. Eliminate hospital accrediting and professional licensing rules, leaving a variety of flexible, competing market-based certification systems to do the job..
3. Limit malpractice awards to actual damages plus the costs of recovery (including reasonable legal fees)
4. Repeal regulations that prevent the sale of insurance across state lines and the prevent the operation of what amount to insurance schemes by health professionals.
5. Alter the tax code to de-link employment and insurance. (This change would have the potential to boost net taxes, of course, if it weren’t made in tandem with the tax cuts for which I’ve argued.)
6. Replace the FDA approval process with competitive private certification systems.

And government officials could also ensure that ordinary people had the resources needed to pay for (newly much less expensive) health care. They could:

1. Eliminate licensing, zoning, and related restrictions that help people from starting small, low-capital businesses.
2. Eliminate rules that prevent poor people from entering business regarded as off-limits (like selling non-approved pharmaceuticals—which could, again, be certified by competitive, voluntary, market-based certification services).
3. Eliminate rules that force poor people to choose between the kind of housing middle-class planners and neighborhood busybodies prefer—and no housing at all.
4. Eliminate import duties.
5. Dramatically slash the tax burden at the state and federal level—sharply increasing the standard income tax deduction and the Earned Income Tax Credit—and making corresponding reductions in spending.

Notice how this package of reforms would work. It would ensure that poor people had more money. By eliminating monopolies (and quasi-monopolistic market distortions like tax subsidies for particular insurance choices), it would also ensure that prices for health care services—whether purchased directly or provided via insurers—were lower. By keeping a competitive market in place, it would ensure that competitive market pressures would tend to elevate overall product and service quality. And because it wouldn’t involve the installation of yet another czar, or the equivalent, because it would leave people free to make their own health-care choices, it would preserve liberty rather than limiting it. It would achieve all three of the goals proponents of current health-care reform measures say they want.

But such a plan would be anything but a continuation of the status quo. It would be a dramatic attack on the status quo, one that redistributed wealth from privileged monopolists to ordinary people, and dramatically increased the likelihood of access to inexpensive, high-quality medical care for all Americans.

The Report of the Inter-Departmental Committee on Social Insurance and Allied Services was published on 2nd December, 1942, in the depths of World War II. The committee, under its chair, the liberal economist Sir William Beveridge, had been established by the wartime government to plan ahead for the challenges of reconstruction of the national fabric after the war.

The report identified what it called the "Five giants on the road to reconstruction: Want, Disease, Ignorance, Squalor and Idleness". Each was to be enjoined in battle by a major plank of the post-war welfare state - social security, the NHS, expanded state education, the nationwide house building schemes that would produce "homes fit for heros" and Keynesian style economic stimulus programs to maintain high employment respectively. That National Health Service Act of 1946 brought into existence, sixty years ago last week on 5th July 1948, what has become Europe's largest employer, the NHS.

The Beveridge Report indeed made much of its wartime heritage. The war was a turning point in history that deserved revolutionary measures afterwards to ensure peaceful and equitable reconstruction. The battle ahead was couched in terms of a "war on want" (and the others of the "Five Giants"). But as my former university chancellor (as of Friday), news anchor Jon Snow, often says, you cannot win a "war on a noun".

So how has the NHS, and the other key planks of the welfare state mentioned, fared in this "war"? It seems obvious that we have not, sixty years on, beaten any of those giants:

Want: we have a society in which the least well off are dependent on the state. If you believe such things matter, and I do, still a fifth of children grow up in relative poverty and the gap between the wealthiest and poorest is larger than ever. Not only that, but as as with "idleness" many are actually trapped in that dependency, facing the highest penalties if they actually manage to find themselves work that might remove them from that dependency in the form of punitive benefits withdrawals rates. None of the myriad benefits in the system are sufficient on their own to sustain life (particularly the pension, now in its hundredth year), so people are often on multiple benefit regimes.

Disease: whilst quite obviously the range of ailments that are now routinely cured or treated is a huge step on from 1948, there is still a six month waiting list for almost any kind of surgery, hundreds of people denied drugs even their own NHS doctors believe may help them, and the whole headless structure is running around trying to meet centrally set targets, which are fundamentally opposed to the founding principles of the NHS - that it should be responsive to particular local needs. In parts of Glasgow East constituency male life expectancy is lower than in some developing countries for example, which, whether it is an improvement on the state of play in 1948 or not is a pretty terrible indictment.

Ignorance: the state education system has become more comprehensive and more centralized. Students are of course now paying for tuition fees in tertiary education, and we see a constant stream of stories from universities and business leaders saying that many people leaving school are functionally illiterate. The most well off are still using private education and the least well off, as Nick Clegg has constantly complained about, seem condemned to inner city sink schools often with little aspiration planted in their heads.

Squalor: this one was primarily about housing. Sure, we had a post-war building boom but now that's looking quite hollow. In fifty years, the UK's housing has become smaller; the only developed nation on the planet where that is the case - elsewhere increased affluence has seen larger, more comfortable homes. If you are stuck on a sink estate, you probably have as much chance as in 1948 of escaping it. Even the right to buy has often failed to give people who were persuaded that buying their fifties built prefabricated type semi (such as the Orlits design currently being demolished all over Oxford) a meaningful asset. And we are in a situation where those who aspire to ownership currently have little hope of being able to afford it.

...and finally Idleness: it is very difficult for work to help the poorest when getting a job can mean lots of hassles with your various benefits and a punitive regime of clawing back those benefits such that you are often effectively earning very little indeed for all the effort of getting a job in the first place and going out to work once you have. And actually I would argue that we want more "idleness". I realize that in the report "idleness" is something either down to the laziness of the individual, or more likely a state enforced on one by lack of work opportunities in the economy. However as we get closer to the ideal of having many menial jobs and tasks done for us by machines, the idea that the only way of gaining purchasing power with which to participate in the complicated world economy is through work should be rethought in any case. It is nothing to crow about that people still have to remain wage slaves in order to achieve some measure of financial security.

So, on a purely cursory glance, these five "wars" are not going well sixty years on. Some battles have been won, and clearly some things are better in so many ways than it would have been at the end of World War II. But some of the problems are as intractable as ever, others are almost victims of their own successes; for example some of the problems of the NHS of course stem from them now being able to treat far more problems than previously and so creating more demand for itself. But I'd go one step further, and say that the weapons deployed in these various wars have in fact entrenched dependency, reduced choice, stifled innovation and competition. Not only that, but they are hugely expensive, now between them consuming not far off half of all our national income and may be suffering from the law of diminishing returns.

It is time we realized that the approach is itself wrong. That, as Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them".

...so, what can we do ...?

There has been much said and written about the NHS as we approach its sixtieth birthday, or to some more like Diamond Jubilee, and no doubt much more is to come. I do want to celebrate the founding of the NHS. It was, of course, the brainchild of a Liberal economist, William Beveridge, whose report about the "war on the five giants on the road to reconstruction" was the genesis of this and other key planks of the welfare state.

It is axiomatic that to be critical of the NHS and its founding principles, free universal healthcare based on need and not wealth from the cradle to the grave, is arch-heresy. If the Vatican had devolved the production of its new Seven Deadly Sins a few months ago to national churches, criticising the NHS would be right up there in the English version. The four new things crying to heaven for vengeance would indeed be "willful murder, defrauding bosses of their rightful share of your labour, the sin of Sodom and criticising the NHS" (nobody, least of all the Labour Party, the Catholic church's historic bosom buddies in working class Catholic areas, cares about "oppression of the poor" any more!).

But I've long had this theory that the great man himself would not be so pleased that his creation was still around. It doesn't seem terribly liberal to use force to compel people to accept decisions about issues as personal as their health or education outcomes made by the state. Indeed, there have been liberal writers since long before the NHS, a hundred years before in the case of Herbert Spencer, who would say that it is on the contrary fundamentally illiberal for the state to educate people, even children, or to try to cushion us from the health consequences of our own life decisions.

But more important than these theoretical arguments about whether it's a good thing or not, I very much suspect that Beveridge would find no cause for celebration that his war on the five giants was still raging to the extent that we still needed the interventionist institutions that any real liberal would surely hope were "emergency measures" necessitated by the recovery from wartime devastation, both physical and social, rather than a permanent feature of life over half a century later. Indeed, not only that they exist sixty years on, but that if anything they have become more centralized, more illiberal, and that in many cases, their benefits seem to have stalled, whilst all the time many people remain utterly dependent on them - a state of welfare, rather than a welfare state.

Let's not forget that this founder of that welfare state was also the man who, like few others, recognized that both Keynes and Hayek had their place in liberal economic discourse. I am sure that even Keynes who, however much he may be portrayed by the Austrian tendency as an inveterate socialist and apologist for big state interventions and planned economy, had pragmatism as one of his catch-phrases ("When the facts change, I change my mind, what do you do, sir?") would have concluded long before now that the institutions that were supposed to have put to an end the war on want decades ago now were perhaps no longer, if they ever were, the solution.

One thing about my political inner journey, from what would be seen as far libertarian left to pretty economically right libertarian, is that when involved more closely with trade union types I used to hear quite a lot how many activists would be delighted if they lived in a world where unions were no longer needed. Yet the same people have elevated the centralized behemoth that is the NHS to a status of its own, not as a weapon in a winnable war on want, but as an end in itself. An end we are not allowed to criticize. Ten years ago, at the Golden Jubilee, I would have been right there with them.

(as a highly ironic aside, I'm listening to something on Radio Four that appears to be a political "TOTP2" about June 1968, and someone has just said of the NHS that, "if we cannot change the NHS to fit our modern society, we may find over the next twenty years or so that we have to change our society to fit the NHS").

Now, don't get me wrong, it's not the aims of the key planks of the welfare state to which I object. Who could say that health care and education or income and housing security were things that should only be attainable by a relatively few wealthy people? No, it's the means by which this access for all is delivered that must be questioned.

And it is perhaps ironic that it is after the longest Labour government in history which has undeniably ramped up levels of expenditure and expectation that it must be most starkly evident that the benefits in outcomes have not been in the same proportion to the additional expenditure. We have to ask whether what was once a powerful argument for the economies of scale in the 1940s and 50s might now be experiencing the full might of the laws of diminishing returns. Or, as I would prefer to say, that the whole way we have prosecuted the war on the five giants so far has been completely arse about face.

Indeed, it seems to me that the whole notion of the welfare state is such a terribly pessimistic one; rather than saying "let's make sure as many people as possible have the financial security to afford to make their own choices about health and education, retirement and whether or not to accept a job just for the money" we are resigned to an ethos that says "there'll always be so many people unable to afford to make those choices in a competitive market that we must monopolize that market and control it". It's the same classical economic fallacy as saying we have a fixed pie and must slice it ever thinner and give everyone less to make it go around, rather than increase the size of the pie so we can all have more.

And the supreme irony is that this very monopolization increases the problems by eliminating competition; protectionism keeps costs artificially high - the NHS may be the world's biggest employer, but that doesn't take into account all the jobs at Glaxo Smith Kline or whoever it also artificially supports through its enormous capacity for patronage and corporate welfare through its purchasing regime.

We could do worse than to look again at the three guiding principles that frames the Beveridge Report:

"The first principle is that any proposal for its future, while they should use to the full the experience gathered in the past, should not be restricted by consideration of sectional interests established in the obtaining of that experience. Now, when the war is abolishing landmarks of every kind, is the opportunity for using experience in a clear field. A revolutionary moment in the world's history is a time for revolutions, not for patching."

"The second principle is that orgaisation of social insurance should be treated as one part only of a comprehensive policy of social progress. Social insurance fully developed may provide income security; it is an attack upon Want. But Want is one only of five giants on the road of reconstruction and in some ways the easiest to attack. The others are Disease, Ignorance, Squalor and Idleness."

and

"The third principle is that social security must be achieved by co-operation between the State and the individual. The State should offer security for service and contribution. The State in organising security should not stifle incentive, opportunity, responsibility; in establishing a national minimum, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family".

How do the current workings and institutions of the welfare state match up to those principles now? And would Liberals do things differently starting now? Will we still need the NHS at sixty-four? Of course, but perhaps lamentably so since it stands as indictment to the lack of progress in addressing the underlying inequities that price many out of the market for themselves.

...let alone enforceable?

A row that has so far been played out in the pages of the august British Medical Journal has suddenly burst out onto the public stage as MPs have found constituents being told they will have to pay for their NHS treatment because they've paid for additional drugs or treatments, for example that the NHS doctor tells them may help but cannot be prescribed by them.

But is the notion that you can be barred from receiving the treatment your tax already pays for even legal? Apply the same argument to education, for example, and parents who pay for a few weeks extra tuition for their child would be forced to pay for the whole of their state school provided main stream education.

And even if it is legal, how is it enforceable? Should someone who buys some nutritional supplement that a friend recommends in addition to prescription drugs for their illness be forced to pay the full costs of their NHS treatment? Or is there some (arbitrarily?) set level - is it okay to buy an extra packet of over the counter drug but not a cancer drug that NICE won't allow you to have on the NHS even if your NHS doctor says it will possibly help over and above what they can do for you? And how do they know? Is it basically down to whether or not a private consultant requests your medical records from the NHS and the person receiving that request has to snitch on you?

Of course I can see there may be cases where it might be legitimate for the NHS to wash their hands of a patient who has paid for some additional or alternative treatment that actually compromises the care the NHS is trying to give that patient. But if it's complimentary to the treatment the NHS are giving, and only unavailable through them because of NICE, or budgets, or rules, that doesn't apply. Indeed, it would probably be saving the NHS money in the longer run - the quicker you are cured, or the more independent you are, because you have supplemented your treatment, the more resources they have to spend on people who cannot pay the extra, surely?

Again, the comparison with private education is interesting - if someone's additional private tutoring has made them better able to cope with their mainstream school classes in some way, the classroom teacher, surely, has more time to spend on others.

And if it's indeed just if it goes against the advice of the NHS, should anyone who does not apply government sanctioned wisdom on healthy living be made to pay for all NHS treatment because their lifestyle is prejudicial to their health in some way? 

Or, perhaps, could it all be a case of corporate welfare - the NHS has "exclusive" deals maybe with drug companies that, say, give them discounts or some other kind of soft benefit even if only their treatment is used for a particular condition and if people opt to go for a competitor's supposedly better treatment the deals all fall apart. The NHS is riddled with protectionism, particularly in its procurement policies. And yes this itself locks out competition and keeps prices high.

The only real answer is that clinicians themselves should be allowed to select and prescribe their own choice of treatment that they think will help that patient get off their hands as soon as possible and let them get on with curing someone else. Surely that's the whole point of the NHS?

Health seems to have become the theme of the day in the Lib Dem leadership debate, at least amongst bloggers (John Dixon's "A Radical Writes" here, and Tristan's "Liberty Alone" here as examples). The two candidates themselves have both now produced manifestos of sorts with Chris Huhne (page 9) promoting "the principle of universal access on the basis of need" and Nick Clegg earlier (despite John Dixon's interpretation otherwise) setting down the principle that "our universal public services must be free to use and accessible to all".

Both have admirable reasons for wanting to retain this universality and free access; that if we choose any other paradigm the poorest will miss out by not being able to afford to pay in a non-free system. But, as I've said about education, and more recently touched on in my piece about protectionism last week to me this seems, if you pardon the terrible health-related analogy, merely a sticking plaster. The ideal revolutionary liberal position surely would be to ensure that everyone had the financial wherewithal to participate properly in a market system and then to trust them to make their own choices.

On the day that the Marmot report into diet and cancer appeared, and whilst acknowledging that he said that his commission was still to deal with policy recommendations, one can be fairly certain that they are not going to recommend that the government, local or national, takes control of what dietary choices people are allowed to make. And yet our knowledge increases all the time that such choices are likely at least as important to our health outcomes as the treatment we may receive once we are ill. So why do we not do the same for illness care when all the evidence suggests that despite £110bn a year public expenditure, we are still the "sick man of Europe"?

Surgeons operating
Originally uploaded by el Reino

The NHS was, I believe, a fantastic idea at the time, in the context of the war on the five wants. In a near bankrupt nation post-war it was also clearly in the national interest to try to use economies of scale and national bargaining to ensure that you could provide a basic level of universal service to all. But let's face it, right now it is a gigantic protection racket, the mother of them all if you ask me. We also heard today that the average GP salary is now at £110,000 - a ten per cent rise in the second year of their new contracts - and yet the Department of Health today has said that 1200 British medical graduates are unlikely to get training places in the UK this year. So there's almost certainly an economic rent arising from the triple protectionism of the NHS, the GMC and the BMA.

Hopefully at least this and the national bargaining for other staff would end with localization so that those parts of the country where it is difficult (read near impossible) to live on a Grade D nurse's salary can offer decent packages, but I haven't even touched on the protectionism of NICE, NHS drugs contracts, the drugs patenting system as a whole and the stifling bureaucracy surrounding anything innovative by way of ways of treating and so on.

None of this is to say that the "private sector" is necessarily the best solution in all areas. I'm against monopoly and public protectionism, not public service per se - after all the nature of the hippocratic oath is dedication to a public service. And the worst of all worlds could be one in which there's a certain amount of public funding up for grabs by private operators who have no incentive to innovate and be really efficient - that's simply transferring the protectionism to shareholders.

No, the problem is really one of how to ensure that everyone would have the ability to pay for their choice of provider. And I return to the Citizen's Income and the systemic economic imbalances that concentrate unearned wealth, or more correctly the wealth created by the community as a whole rather than by an individual's or firm's own innovation, investment and labour. I'm not a good one to talk on health issues - the last psychiatrist I saw reckoned my attitude to my developing diabetes was one of the "slow suicide". But I'll bet if I was faced with a bigger insurance premium or buying more fruit and veg instead of eating crap, I'd probably plump for the healthier lifestyle to minimize my insurance. Redistribute the common wealth properly to everyone as is our birthright and we have these choices.

Just look at Nuffield Hospitals Group right now - it's buying up private gym firms like Cannons (effectively turning private companies into social enterprises of course). Why would it be doing that? Because BUPA really wants its members to live healthily, not to call on them when they're in a preventable medical condition. I'm also sure that insurance firms are likely to be better, with safeguards against abuse, at sifting out bad clinicians; it's in their interests to do so. Their actuaries will be poring over doctors' success and failure rates to ensure they're not granting accreditation to people whose patients inexplicably drop like flies, or who routinely over-diagnose or over-prescribe. Nor would they be likely to allow their members to spend a single night in a hospital where they're more likely to come out with a worse illness with attendant higher costs, if they come out at all.

One model I've looked at, for example, would see a GP as a "personal health adviser" who advises their clients through the maze of choosing lifestyles, treatments, clinicians and therapies that will be efficient and varied. I'd like to see surgical firms organized more like barristers' chambers with large national firms specializing in different clinical areas ready to hot-foot it to a treatment centre several hours away at the drop of a hat to do an op in their specialism rather than a patient wait on a list for the local, perhaps only semi-specialist to have a free spot in a tight general surgery list. You could have a choice of a large general hospital sized treatment centre thirty miles away in the local city, or a ten bed rural town cottage hospital with one theatre with the same surgeon prepared to visit either for the right fee but with different approaches to aftercare based on different needs of patients and families.

Sure, there's still a role for some kind of local democratic input - most especially in procuring facilities and staff for emergency medicine, but even their funding options could be varied - with some able to provide that by engaging local charitable resources, others perhaps by raising a local tax of some kind, perhaps even through planning obligations, who knows. But one thing is certain: these options and innovations are unlikely to appear when the system is riddled with protectionism and political game-play.