"It is an enduring eccentricity of the British that we regard our National Health Service as the envy of the world, despite the evidence staring us in the face of slum hospitals staffed by surly trade unionists ( the doctors surliest of all) and run by vast legions of bureaucrats accountable to nobody, least of all the customers"

1. The NHS is cheap by international standards. For example, the UK spent 7.1% of Gross Domestic Product (GDP) on health care in 2000, most of this on the NHS, while the average for the rest of the European Union (EU) in 1998 (latest data available) was 9.2%.
   
   
2. The level of health in the UK is similar to that in other developed countries. For example, the life expectancy of a male in the UK born between 1990 and 1995 was 73.7 years whereas the average for the EU was 73.2 years. The corresponding figures for females are 79.0 years in the UK as against 79.6 in the rest of the EU.
   
   
3. The NHS has avoided many of the problems of insurance based health care systems:
   
   (a) Doctors are either salaried or under contract to the NHS. They are not normally paid a fee for service for NHS work. This has avoided over-supply problems (producer moral hazard and supplier induced demand see units 3ii and 3iii).
   
   (b) Doctors decide who needs treatment. In particular GPs act as both a guide (to the appropriate specialist) and as a filter. This both helps overcome the problems of consumer ignorance and provides a means of controlling the level of demand.
   
   (c) Since health care is funded by taxation and is free at the point of use, there are no gaps in the system and no stigma attached to receiving care.
   
   (d) The budget for the NHS is determined centrally. The Secretary of State for Health negotiates with the Treasury and the decision is then ratified in Cabinet and voted on in Parliament. This budget determines the quantity of resources available for the NHS and thus provides a way of explicitly setting the maximum amount of health care that can be available to NHS patients as a whole.
   
   
4. The NHS has continued to be popular. Klein has commented that "the NHS seems to be a remarkably successful instrument for making the rationing of scarce resources socially and politically acceptable".
   

Barr argues that the NHS has been successful because it has resolved many of the problems which face health care systems - "an institution which arose historically largely for equity reasons works because it goes with the grain of efficiency considerations".

What about the criticisms of the NHS? Many people believe that the NHS suffers from serious problems.

1. The critics argue that insufficient resources have been devoted to health care so that there is less care than consumers would like. This is a consequence of funding the service from taxation - there is no mechanism whereby consumers can signal their willingness to pay more. According to this view the fact that the UK spends less of its GDP on health care than other developed countries reflects a weakness of the NHS rather than evidence of its efficiency. This also explains why the NHS appears to be in continual financial crisis - waiting lists, closed wards and an inability to treat particular patients or particular conditions all reflect a failure to devote sufficient resources to health care.
   
   
2. The system is not sensitive to consumer preferences. Doctors have considerable independence or clinical autonomy. They make decisions about patients' treatment with little reference to either the patients or the managerial structure of the NHS. This has resulted in a system which is unwieldy and difficult to control and not responsive to consumer demand.
   
   
3. The NHS is not as efficient as it could be. Some hospitals need to be closed and the resources transferred into community health care. But opponents, including some doctors, have successfully delayed, and in some cases prevented, such changes from occurring. They argue that the closure of any hospital is a loss of NHS services regardless of how the resources made available may be used to provide other, more valuable, kinds of health care.