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Should there be a tax on private health providers?



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 George Osborne is of course petrified. Last year was supposed to be his great ‘tax reforming budget’ and he’d even bigged it up for Lord Lawson of Blaby. Instead it disintegrated into pasty wars, and Chloë Smith talking gibberish with Jeremy Paxman on Newsnight. Books have been written on the purpose of the tax system, and I suppose that I am thinking about tax a lot because of the impending UK budget, as Britain propels itself into a ‘triple dip recession’. The privatisation of the NHS is widely opposed in fact by the general public, but due to the well-known “democratic deficit” this appears to have evaded English policy makers for the NHS for the last two decades at least. The next Labour government is likely to adopt a redistributive stance of sorts, as that is the ‘road map’ Ed Miliband has declared he wishes to take. It will also attempt to do what it can do by solving the problem before it’s started, or trapping the horse before it’s bolted, by mechanisms such as the ‘living wage’ (nobody of course wishes to mention the dreaded ‘predistribution’). This is a different sort of fairness to the  Liberal Democrats, and not even “fairness” as illustrated by LibDems voting for a ‘bedroom tax’. We have a burgeoning deficit, not helped by an economy driven into retropulsion through the economic policies of George Osborne pursued since May 2010, including strangulation of consumer demand, throttling of infrastructure spending, and epitomised by falling tax receipts and stagnating growth.

The Tories hate “scroungers”, people who are not paying their own way. Integrated healthcare is a major policy plank for the Labour Party currently, and it’s important to be clear that this is a different sort of “integrated” healthcare to that defined by health maintenance organisations of the US private healthcare system. Private healthcare have treated the privatisation of the NHS as ‘low hanging fruit'; it is very attractive to private equity in a way that horsemeat wasn’t (and could even be more palatable as a branding target). But the time perhaps has come to think about what private suppliers are taking out of the NHS and what they’re putting in.

What they’re taking out is a lot of goodwill and reputation (they are different things in the law of intellectual property, strictly speaking) through the NHS global. Of course the commoditisation of this brand reached new levels under Labour in an initiative called ‘NHS global’, so Labour cannot claim to come to this problem ‘with clean hands’. However, private companies are not charged money for the use of their logo in selling their services or products, to my knowledge, in the same way an assignment of trademark would work in the private sector. This is a missing source of income for the struggling English economy.

What they’re not putting in are two major things. They are not contributing to the preventative plank of healthcare. I have latterly in my life worked as a volunteer for two medical charities for a substantial period in my life while newly physically disabled and recovering from a life-threatening meningitis, at the head office here in London. I did my PhD in dementia at Cambridge, but even the discussions of how dementia might be prevented is not a lazy one. Whilst the major burden of dementia is currently Alzheimer’s disease, and the epidemiology of dementias is roughly similar across all jurisdictions and ethnicity, it is important to realise that a major cause of dementia, vascular dementia, has risk factors which are amenable to intervention, such as in blood pressure, cholesterol, lifestyle (e.g. smoking) or medication (e.g. aspirin). I also worked at the British Lung Foundation, and a major thrust of their work was chronic obstructive pulmonary disease; smoking is known to slow rate rate of progression of this condition, characterised by airways changes from smoking to cause cough, shortness of breath and even medical emergencies as acute exacerbations. Particularly in the latter health is markedly affected by health inequalities, and this can depend on where you live. At a time when the NHS is being sold off to the highest bidder, we are being left with a bitty fragmented system, where national policy has gone to pot. Public health is in a process of transition to local authorities, the National Patient Safety Agency is being abolished, the Food Standards Agency is being abolished, and the Health Protection Agency is being abolished. If the private providers do not wish to contribute to campaigns in preventative medicine, which is at the heart of the health of the nation, through being “nudged”, maybe they can be taxed?

And what about the professional training of doctors and nurses? Currently virtually all doctors have trained in the NHS at some stage, and this costs for each doctor somewhere in the order of millions. In the US, federal states pay for the training of doctors, and health maintenance organisations, the private linchpins of the US system, do not. The Academy of Royal Colleges recently opposed the section 75 Regulations, and all of the Medical Royal Colleges opposed the Health and Social Care Act (2012), but the Government engaged in a sham listening exercise aided and abetted by NHS Future Forum. All of this is ‘market signalling’, a term familiar in the private sector, of ‘sending out the right noises’. In the same way, the current thrust towards ‘integrated care’ is a fudge towards ‘sweet applehood and motherpie’, and I would not be surprised if this had been the result of some political action from Earl Howe and Liberal Democrat Peers.

Notwithstanding how we arrived at this situation, which could have been the disaster of ‘compulsory competitive tendering’, there is a real opportunity for Labour to think about how it can deliver ‘integrated care’, which could have at its heart the well-organised delivery in hospitals and in the community of ‘whole-person care’, through the holy trinity of physical health, mental health and social care. Tricky decisions will come how this will be organised, and it could mean that there is a shift in power away from NHS Foundation Trusts (and this will inevitably have knock-on effects for Monitor and the whole organisation of the NHS infrastructure). And it will involve tricky decisions about how the funding streams will converge. However, some of the money will need to go into regulation of all healthcare professionals to ensure that integrated care is delivered in a safe way, with patient safety as a top priority.

Parliament can do what it wants, and it’s always been in the case under European law that policy decisions can be made if it is for the public good. European competition law has been thrust into the healthcare debate such that ‘equality of opportunity’ is provided for healthcare providers. People on the right wing will immediately reach for the ‘unfair competition’ attack, saying that by taxing private providers it is giving unfair advantage to the NHS. The whole point of the new Act was to make it as easy as possible for ‘new entrants’ to enter this market, by removing ‘barriers-to-entry’, so a tax might serve to deter new entrants; or rather new entrants coming in to a do a metaphorical form of asset stripping. But is there anything necessarily wrong in wanting to protect the NHS, which has a unique selling point universal healthcare which is free-at-the-point of access? And what about the fact that tax disproportionately affects a certain section of society? Well, this again politically is a question of priorities – we currently have about to go through parliament a ‘bedroom tax’ or ‘bedroom subsidy arrangement’ which affects disproportionately disabled citizens.

Am I serious? Yes and no – I wish to bring out some major policy issues in ‘integrated care’ which I hope will be considered in our Labour policy review, and I wish to emphasise that integrated care is also about professional training and preventative medicine. Do I think we could tax private health suppliers? Not with the Tories and LibDems in power. Parliament can do what it wants, provided that it explains to Europe that it is necessary and proportionate, in most cases.

  • http://www.facebook.com/adam.clifford.5 Adam Clifford

    Too new labour for me.The H&SC bill was 5-6 years in the making.It is very clever-the negative choice to introduce section 75 Regulations without debate is an indication of how well Mckinsey and Company[and KPMG] have prepared.The so-called amendments,rewording,of the Bill before it was passed in the House of lords[with a lot of lords having investments in private healthcare]to no effect.The failure to keep the secretary of state’s ‘duty to provide’ and retaining the bill’s phony ‘duty to promote’.
    There is a lot of verbal trickery going on,and people,mps are not up to the job.There are contract lawyers on the job,and they are too smart for amateur politicians,and the £100 or so billion NHS operating budget is up for grabs.This bill/act is written like a business contract and will cause the NHS death by a thousand interpretations and sub-clauses.
    Cleverness here is going to met met by even cleverer cleverness.Expensive lawyers and bought politicians,lords and a silent,compliant press.These were the problems that have made this situation possible and will continue to work for the privatisation of the NHS,and against the wishes of the elecrorate/public,and the expertise in the medical professions,probably illegally,apart from not having the mandate to make these changes.Nobody seems to want to investigate the presence or not of a mandate to implement these changes,or to check out it’s legality,with reference perhaps to ultra vires activity.[It seems that the duty of the secretary of state to 'promote' healthcare provision might have weakened the case for ultravires activity.]

  • http://www.shibleyrahman.com shibley

    Excellent comment

    I wrote this when I was in a very tongue-in-cheek cynical mood at around 6am, apologies

    As everyone who knows I am in far from New Labour. Interested to read your comments about the law here – not sure I agree with them. Have completed my own Master of Law and Legal Practice Course.

    You might be right though. thanks.

  • http://twitter.com/joefd j farrington-douglas (@joefd)

    So, there is already a plan to charge a training levy on providers that don’t train junior docs. I don’t know how far off this is, but spoke to senior colleagues at AOMRC last week and he assures me it is coming.

    Also look out for the (now delayed) Monitor report into the Level Playing Field. This was due in January but after the Guardian exposed the plan to compensate private providers for the ‘unfair’ corporation tax burden it seems to have been buried.
    http://www.monitor-nhsft.gov.uk/monitors-new-role/fair-playing-field-%E2%80%93-the-benefit-patients

    Oh and did you know that while private medical insurance is taxed, self-pay private healthcare is VAT-exempt?

    • http://www.shibleyrahman.com shibley

      Wonderful comment – very many thanks.

      I should appreciate that my article was supposed to be rather tongue-in-cheek, but I really appreciate your kindness in your interesting remarks.

      Knew none of that.

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