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In the UK’s health system, rationing isn’t a dirty word

The UK has one of the most equitable health care systems in the world. Here’s how.

Scotland leader Nicola Sturgeon officially opens an NHS Trauma Center in Dundee, Scotland, on November 19, 2018.
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In 2016, the Commonwealth Fund, our partners on this project, surveyed 11 high-income countries about cost-related barriers to care. Americans were the most likely to skip needed care because of costs, with 33 percent having done so over the past year. Residents of the United Kingdom were among the least likely, with only 7 percent saying the same. The same was true, notably, of dental care; 32 percent of Americans said they skipped needed dental services due to cost, while only 11 percent of Britons did the same.

Yet in 2016, health care spending in the US equaled more than 17 percent of the country’s GDP, while the share of health spending in Britain was only 9.7 percent. Nor do health outcomes seem to be suffering. Life expectancy in Britain is higher than in the US, and on measures of “mortality amenable to health care” — which specifically track deaths that could have been prevented by medical intervention — the US performs worse than the UK.

So here, then, is the comparison: The UK spends barely half what we do, covers everyone, rarely lets cost prove a barrier for people seeking care, and boasts health outcomes better than ours.

Which raises the question: How does the UK do it?

UK Prime Minister Boris Johnson visits a hospital in Harlow, Essex, after pledging an overhaul to cancer screening by providing funding for 300 diagnostic machines in hospitals across England, on September 27, 2019.
Stefan Rousseau/PA Images via Getty Images

No system can say yes to every desired treatment, in every context, at any price. All systems have to tell somebody no: Either providers cannot charge what they want, or patients cannot have what they want, or taxes are going to be much higher than anyone wants.

On this score, the UK offers a particularly valuable contrast with the United States. “Britain spends a lot less than we do, yet in terms of broad culture, they have a similar value system to our own,” says Hank Aaron, a Brookings Institution health economist and co-author of two books about the British health care system. “Where do they economize? What do they do? How do they ration?”

Decisions of this sort can be made more or less bureaucratically, more or less transparently, and more or less equitably. But the American health care system is uniquely fractured, opaque, and cruel in its approach to saying no. It says no through prices — but not, as in most other countries, by limiting the prices pharmaceutical companies and hospitals can charge for treatments. Rather, it says no by letting them charge whatever prices they want and denying care to those who can’t afford the cost.

The paradox of the American health system, then, is that it poses as a system with no limits — there is no centralized authority rationing care or negotiating treatments — even as it turns tens of millions of people away from services they need. But the system works quite well for those who profit from it, or can afford all that it has to offer, and they can be mobilized powerfully to resist change. When reformers threaten the status quo, the health industry blankets airwaves with ads warning that under the new system, there will be someone who says no to you: the government.

“The US health care system has been designed as if, with enormous intelligence and intent, it was to be as resistant to cost control as possible,” Aaron says.

The UK is the opposite of the US in how it says no. It has embraced the idea we fear most: rationing. There is, in the UK, a government agency that decides which treatments are worth covering, and for whom. It is an agency that has even decided, from the government’s perspective, how much a life is worth in hard currency. It has made the UK system uniquely centralized, transparent, and equitable. But it is built on a faith in government, and a political and social solidarity, that is hard to imagine in the US.

A NICE health care system

At the center of the UK system sits the National Health Service. Founded in 1948, the NHS goes beyond single-payer health care into truly socialized medicine: The government doesn’t just pay for services, it also runs hospitals and employs doctors. The system is financed through taxes, everyone is covered, and supplemental private insurance is rare; unlike in, say, France, where most residents have supplemental insurance, only one in 10 Britons go outside the NHS system for private coverage.

In part because the NHS is so centralized, it had long been bedeviled by questions of what to cover and how much to pay. In systems where most residents have additional private insurance, new drugs, devices, and treatments can first be tested in the private market. But in the NHS, access relies almost entirely on the government’s decision. So it’s paramount those decisions are made in both technically competent and public fashion.

The English National Health hospital ward in 1948, the year the NHS was founded.
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In 1999, the British government set up the National Institute for Care Excellence, or NICE, to assess the cost-effectiveness of medications, procedures, and other treatments, and make recommendations to the National Health Service about what to cover and how. NICE has forced the NHS to become the anti-US: Rather than obscuring its judgments and saying no through countless individual acts of price discrimination, NICE makes the system’s values visible, and it says no, or yes, all at once, in full view of the public.

What sets NICE apart is that it makes its judgments explicit. The organization uses a measure called quality-adjusted life years, or QALYs, to make its recommendations. One year in excellent health equals one QALY. As health declines, so does the QALY measurement. The difference between being alive and dead is, on this measure, easy to express: Death represents the end of QALYs, a zero stretching out into infinitude. But ill health is trickier to measure. NICE uses questionnaires measuring people’s pain levels, mood, daily activity, limitations, and so on to arrive at rough estimates (for a weedsier description of QALYs, this article in the journal Prescriber is a good primer).

With some exceptions, the organization values one QALY at between 20,000 and 30,000 pounds, roughly $26,000 to $40,000. If a treatment will give someone another year of life in good health and it costs less than 20,000 pounds, it clears NICE’s bar. Between 20,000 and 30,000 pounds, it’s a closer call. Above 30,000 pounds, treatments are often rejected — though there are exceptions, as in some end-of-life care and, more recently, some pricey cancer drugs.

“I’m not aware of any other country with such explicit criteria,” says Thomas Rice, a UCLA health economist who’s researching a book on how health care systems control costs. “Often what other countries do is a new drug comes along, they look at how much better it is than existing drugs, and they use that to set price. That’s a relative comparison. NICE uses absolute criteria.”

QALYs can be controversial. Take, for instance, the core calculation: the adjustment of life-years by quality. Who’s to say that life is worth less when lived with a disability or chronic condition? Or take the assumption of equality: Ethicists have raised a host of objections to the way QALYs assign an equal value to a treatment that applies to patients in very different situations. QALYs are rife with such judgments, and even if you believe in the underlying values, the outcome will always be arguable. One persistent criticism of QALYs is they create an illusion of technical specificity on what is, in the end, a subjective, value-laden guesstimate.

Thousands of demonstrators gathered in central London to celebrate the 70th anniversary of the NHS and to call for an end to budget cuts and staff shortages, on June 30, 2018.
Wiktor Szymanowicz/Barcroft Media via Getty Images

But there’s no system, anywhere, that doesn’t make these judgments in one way or the other. QALYs simply make them explicit, visible, and, importantly, debatable. This is part of what makes transparent rationing of care difficult to sustain. We don’t like to admit that health systems place a price on human life, and that there are prices we won’t pay. But there are, and if governments are going to have any money left over for things like education and infrastructure, there must be.

If America were to move to a national health system all at once, some kind of transparent standard for deciding what prices would be paid and what would be rejected as excessive would be crucial — particularly because, in a big-bang reform, every provider would lobby as if their life depended on it to get the treatments they produce or offer priced high.

“There’ll be tremendous political pressure to set that payment rate way higher than the Medicare rate,” Rice says. “That’s one reason it’ll be challenging for a single-payer system to save money from the outset.”

The question American health reformers have to answer: Could our system withstand that pressure?

The political economy of rationing

In 1999, NICE considered its first drug: Relenza, an antiviral medication to treat influenza. Created by the drug company Glaxo Wellcome, Relenza was pricey — roughly $60 a dose, adjusted for inflation — and its benefits were modest. It reduced flu symptoms in the general population by about a day, but there wasn’t much evidence it was effective for the most vulnerable subgroups: the elderly and asthmatics. And it carried the danger of flooding doctors’ offices with flu patients, and thus spreading the disease more rapidly.

So NICE rejected it. “UK’s NICE turns nasty, rejecting Glaxo Wellcome’s anti-flu drug Relenza,” read the headline in the trade publication the Pharma Letter.

“When we said ‘no,’ Glaxo went berserk,” recalled NICE’s founding chair, Michael Rawlins, in an interview with Health Affairs. “Their then-chairman stormed into Downing Street and threatened to take his research out of the country.”

But then-Prime Minister Tony Blair and his health secretary, Frank Dobson, stood by the fledgling organization and its decision. “That was very important,” Rawlins said. “It was the first big test — although I didn’t realize at the time quite how big a test it was. But it set the stage. It showed we had political backing.”

Prime Minister Tony Blair (center) and Secretary of State for Health Frank Dobson (far right) visit a hospital in Basingstoke, UK, on February 16, 1999.
Tim Ockenden/PA Images via Getty Images

Ultimately, NICE forced Glaxo to go back and produce evidence that Relenza helped the elderly, and when it did, NICE approved the drug — but only for that group.

This illustrates a crucial principle for health reform: A public health system is only as good as the government that creates, runs, and protects it. Saying no to treatments that people want to get, and that powerful corporations want to release into the market, will generate furious backlash. If the government isn’t trusted enough to win those fights, or if the politicians turn on the civil servants when they pick those fights, the structure collapses.

The late Uwe Reinhardt, the famed health economist who helped set up Taiwan’s single-payer system (read my colleague Dylan Scott for more on that), once told me that he feared American politics was too captured to properly construct a single-payer system.

“I have not advocated the single-payer model here,” he said, “because our government is too corrupt. Medicare is a large insurance company whose board of directors — Ways and Means and Senate Finance — accept payments from vendors to the company. In the private market, that would get you into trouble.

“When you go to Taiwan or Canada,” he continued, “the kind of lobbying we have [in America] is illegal there. You can’t pay money to influence the party the same way. Therefore, the bureaucrats who run these systems are pretty much insulated from these pressures.”

The US, in my view, provides evidence for both optimism and pessimism on this score. For all the American political system’s porousness, Medicare and Medicaid do restrain costs compared to the private sector. Gerard Anderson, a professor of international health at the Johns Hopkins University Bloomberg School of Public Health, estimates that private insurers pay, on average, 220 percent what America’s public insurers pay for the same treatments.

Critics argue that the differential only exists because providers can balance the discounted public price by gouging private insurers. I don’t think the data supports that argument, but even so, there’s little doubt that reverting the entire system to Medicare prices would be hugely disruptive. And in part because the differential is so big — both here and around the world — providers will fight like hell against any effort to impose public pricing levels across the entire system.

Here, recent history tells a grimmer story for reformers. Among the most touted of the Affordable Care Act’s price controls and spending offsets were the “Cadillac tax” on high-cost health insurance and the medical device tax. In December, House Democrats and Senate Republicans agreed to repeal both, in a rare act of bipartisan comity.

Meanwhile, Donald Trump ran for president condemning the high cost of prescription drugs and promising change. He continues to do so. “Pfizer & others should be ashamed that they have raised drug prices for no reason,” he tweeted in July 2018. “They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!”

But bills to respond have languished amid Republican opposition. “Socialist price controls will do a lot of left-wing damage to the health care system,” Senate Majority Leader Mitch McConnell said in September last year. “And of course we’re not going to be calling up a bill like that.”

In a system as polarized as ours, where trust in the government is low, “bureaucrat” is a dirty word, and special interests fund political careers, will voters believe in the process when these decisions go against them? Will they hold firm against the onslaught of public advertising on behalf of medical interests? And what happens when the government says no to something people really want?

People protesting Trump administration policies threatening the Affordable Care Act, Medicare, and Medicaid in Los Angeles on January 25, 2017.
David McNew/AFP via Getty Images

Health systems need to be built first on a firm political foundation. It would be challenging, to say the least, for an NHS-like system to be designed in the face of the constant legal challenges, repeal efforts, and attempts at political sabotage that have pockmarked the Affordable Care Act.

Aaron, the Brookings economist, argues that the politics of the NHS is rooted in part in Britain’s post-World War II ethic of shared sacrifice. America, particularly at this moment in its political history, lacks such solidarity to fall back on. That, more than anything else, may be the central challenge that any effort to create a national health system in America must face.

A question of trust

The UK system is far from perfect. The country spends far less than we do, and gets results comparable to ours, but horror stories of long waits and denials of care abound.

Some of these tales are overstated, but they reflect real difficulties in the system — and real choices. The system really is underfunded — though financing the shortfall will still mean an NHS costing only a fraction of what the US health care system spends. But even with more spending, one way the UK controls care simply comes down to managed inconvenience: While Commonwealth’s survey finds residents of the UK and US report similar success in getting next-day care when they need it, Britons are more than three times as likely as Americans to say they had to wait more than two months to see a specialist.

And NICE sometimes gets it wrong, or gets overruled. There’s been particular controversy over a series of pricey new cancer drugs, where the backlash to NICE’s rejections and slow-moving process led to the establishment of a separate public fund to cover cancer drugs that NICE had rejected or hadn’t yet evaluated.

Still, from the British perspective, it’s the American health care system that’s truly nightmarish. As bad as it is to wait longer than you wanted for care you ultimately received, it’s far worse to never be able to get that care at all.

Danielle Tiplady, a British nurse, wrote, “I have been shocked by the horror stories from my US counterparts. The Americans don’t have a healthcare system, they have a rolling healthcare crisis.”

NHS workers and their supporters join a mass protest in London to keep the NHS entirely public and against slow privatization, on February 3, 2018.
Mike Kemp/In Pictures via Getty Images Images
The impromptu demonstration drew thousands of protesters wanting an increase in NHS funding.
Mike Kemp/In Pictures via Getty Images Images

It’s not that the political trade-offs of rationing are easy. It’s that, once well-implemented, they come to seem far better, and fairer, than the alternative. “The NHS is seen as a national treasure,” says Carol Propper, a health policy expert at the Imperial College of London. “Elections are fought and won on the basis of NHS funding.”

The most recent UK election is a case in point. One of the keys to Boris Johnson’s huge electoral win was his promise to increase funding for the NHS, which deprived Jeremy Corbyn’s Labour Party of a central issue. Johnson has even said that the NHS, not Brexit, will lead his agenda.

“I frankly urge everyone on either side of what was, after three and a half years, after all an increasingly arid argument, to find closure and to let the healing begin,” Johnson said in his post-election message. “Because I believe — in fact, I know, because I have heard it loud and clear from every corner of the country — that the overwhelming priority of the British people now is that we should focus above all on the NHS.”

This is the irony of comparing health politics in the UK and the US. In part because of the public and fair ways the UK says no, its health system has generated a form of social solidarity that cuts across political lines, that transcends party divisions. In the US, because of the opaque and unfair ways in which the system says no, health care deepens our political divisions, as the system’s current winners fear that reform could make them tomorrow’s losers.


The Everybody Covered project can be found at vox.com/covered. This series was made possible by a grant from The Commonwealth Fund. All content is editorially independent and produced by our journalists.

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