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How Is The Health and Welfare Landscape In The UK Changing?

October 14, 2011

I have recently been focused on how the health and welfare landscape in the UK is changing and I am pleased to provide a summary of my views on these important changes.

The policy drivers are now pretty clear.

The NHS reforms will:

  • consolidate the independent operation of NHS Foundation Trusts;
  • devolve commissioning of local services to clinical care groups (largely run by GPs);
  • abolish Primary Care Trusts (which used to carry out this activity in the past) although it looks like some PCT consortia will remain for a time due to concessions granted in the government “listening exercise”;
  • abolish Regional “Strategic” Health Authorities;
  • give overall commissioning responsibility to a new unelected “NHS Commissioning Board” with the intention of reducing the role of the Secretary of State for Health; and, following the listening exercise, the scope for private and NGO provision of services will be curtailed because they will not be allowed to compete with the NHS on price.

On the welfare side, more and more existing disability benefit claimants are being moved to job seekers allowance and reliance on means tested income support if they cannot get a job.  This is because unemployment benefit values continue to drop in proportion to average incomes and the tests for receiving higher level disability benefits are much tougher than they were.  The IPPR have recently argued for higher levels of unemployment benefits funded through loans but this would cost the Treasury money and has not attracted much political support.

On the social care side confusion reigns.  The Dilnot report on long term care has proposed some interesting changes to cap the total and annual cash risks faced by people entering care homes.  Unfortunately this too would cost the Treasury money and although on the face of it the caps (£35k total for care costs and £10k per year for living expenses costs) are simple, the report suggests a very complex system to calculate them and it is unlikely that anything will happen in this Parliament.

And over all this are the ambitious plans to reduce government spending drastically over the next few years.  Despite good intentions even the NHS will have to achieve massive savings.  This is because it is being asked to make efficiency savings at a level never before attempted and its budgets are being raided by other cash strapped departments, and local authorities, to carry out functions that have been allocated elsewhere.  In previous tough times the reverse has been true – the NHS typically raided social care budgets.

But what does all this mean in practice?  The early warning signs are there:

  • increasing social discontent among those reliant on benefits; longer waiting times for hospital tests and admissions;
  • continued NICE pressure on new high cost drugs;
  • GPs offering private queue jumping on a self pay basis;
  • and ongoing quality of care scandals, particularly for older people.

Overall, the impact for those relying on the State is difficult.  But what of the role of private insurance?  One would think that the markets for private medical and disability insurance would be booming.  Actually this is not the case. The only real growth has been in the cheaper medical cash plan market and this has been at the expense of traditional full private medical insurance (PMI).  This is due to a number of factors, for example full PMI is now very expensive and two thirds of the market is provided by employers for their employees.  Without recovery this market will remain under pressure.  The same applies to disability insurance.  The only market that is likely to grow is for richer individuals – not the “squeezed middle”.  In terms of population numbers this group is very small and not particularly relevant to social policy objectives except on the political battle ground between right and left.

Many have spoken about lack of growth of employment in the private sector not mopping up those made redundant from the public sector and in social provision a parallel process may occur – with no growth in private solutions to replace reduced state support.  In scenario terms we were supposed to move from the largesse of the labour years to big society localism and “happy but broke”.  If things continue as they are we may move to “unhappy and broke”.  Not a good place to be…  Let us hope things start to turn around soon.

Written by Richard Walsh, Director and Fellow, SAMI Consulting

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