Anti-Business Mentality Blinds Labour to Health Improvements

Britain’s Labour Party wants to roll back liberalizations in health care, ignoring the good they’ve done.

The British Labour Party's shadow health secretary, Andy Burnham, in London, England, June 9, 2010
The British Labour Party’s shadow health secretary, Andy Burnham, in London, England, June 9, 2010 (Dave Wood)

Blinded by its anti-business mentality, Britain’s Labour Party would roll back liberalizations in the National Health Service if it wins the election in May, leader Ed Miliband said on Friday.

Miliband said in London his party would halt the “tide of privatization” he claims has taken place in health care since the Conservatives and Liberal Democrats came to power in 2010. Although it was Labour that brought private contractors into the system in the first place while the rate at which services are outsourced has actually slowed under the current government.

No matter. Under the next Labour government, Miliband said, private firms would have to reimburse the National Health Service if they exceed a 5 percent profit cap on contracts.

Currently around 6 percent of health services in England are provided by private companies.

Miliband said contractors were “draining money away” from patients.

The money we pay for our health care should be invested for patient care and not for the excess profits of private firms.

This is a simplistic view. Profits incentivize companies to cut costs and improve quality in order to attract more customers — incentives that are utterly foreign to the National Health Service’s bureaucrats. 2011 research showed that surgery patients from privately-run facilities were healthier and experienced less severe recovery conditions than patients undergoing the same procedures in NHS hospitals.

Also, who decides when profits are “excessive”? Miliband?

The Labour proposal would do more than cap profits. It would effectively roll back the very use of contractors.

The BBC’s health editor, Hugh Pym, points out that companies need a return “if they invest up front to provide clinical services” and cautions that firms might be deterred from bidding if there is a limit to the profit they can make.

What Labour, if elected, will have to decide is whether a shrinking pool of private contractors would make it harder for the NHS to keep up with rising demand for care.

Three million patients are currently waiting to be treated. The health service itself expects to be £30 billion in the red by the end of the next parliament.

Labour wants those patients treated, raise health spending, merge social care — which is now run by local authorities — with the National Health Service and get rid of contractors. How will it pay for it all? Why, tax the rich, of course.

Miliband didn’t say on Monday he wanted to get rid of contractors altogether but his shadow health secretary, Andy Burnham, did in January. “If we allow market forces to continue to take hold,” he said at the time, “they will eventually break the NHS apart.” Burnham claimed that involving private health providers had raised the cost and complexity of care when the opposite is evidently true.

For Labour, this isn’t about finding a way to provide the best possible health care at the lowest price. As Burnham put it, this is an ideological battle — between “NHS values” and business values; between “collaboration” and “competition”; between “patient care” and profits.

Seeing those things are mutually exclusive may be Labour’s biggest mistake when it comes to health care.