Radix Fellow, Prof Stephen Smith, has proposed a new hypothecated tax and other measures to increase NHS funding and to ensure everyone contributes fairly. These proposals are among the recommendations in Patient Value, Incentives and Funding, the fourth in the series of books published by Radix and written by Prof Stephen Smith, former chair of East Kent NHS Hospital Trust, which examines the radical reform needed to fit the NHS for the 21st Century.
The paper recommends five measures which, if implemented, would bring the health and care system up to parity with other leading European countries.
- The first of these measures is a hypothecated tax, which involves creating a specific tax for the purpose of funding both health and social care. The rationale is that it is appropriate for a hypothecated tax because it is a “public good” and that “individuals cannot be excluded from use”.
- The second measure is to introduce charges for abuse of the NHS system (for example, repeatedly missing appointments or assaults on staff). The report reveals that £216m is wasted annually due to missed GP appointments and that “around one in 20 [appointments are] wasted annually because patients fail to attend without informing the surgery”.
- The remaining measures are topping up fees for ‘extra’ hospital services (with cross-subsidising for those with less money), commercialising tax funded innovations and encouraging the use of private healthcare schemes through tax incentives.
The report describes the benefits of hypothecated tax systems that have been shown in other countries, such as Australia, with Prof Stephen Smith explaining that “[The Australian Medicare] social insurance system is a definite strength and one from which Britain can learn”.
Ben Rich, CEO of Radix stated, “The current system for funding the NHS has proven to be disastrous in a number of ways, primarily the fact that it simply doesn’t raise enough money to provide adequate and reliable healthcare to the millions that rely on it. A hypothecated tax is one of the only solutions that appears to be both realistic and effective in overcoming these challenges”.
Professor Stephen Smith further emphasised “Evidence from around the globe shows that systems involving hypothecated taxes for health and social care have many benefits, including increasing transparency into government spending and ensuring that the resources intended for health and social care are spent there.”