Few weeks go by on the broadcast media’s main “news” programmes without an intervention from at least one spokesperson from the “Institute for Economic Affairs”. However not one of the interviewers ever bothers to press the question of exactly who they are, and who funds them and their rabid neoliberal views, which include rejection of the NHS as a publicly funded and provided service, and opposition to the “sugar tax” and any attempt to combat the obesity epidemic by curbing the “freedoms of the giant food monopolies.
The IEA is technically is an “educational charity,” but in practice operates as a right wing think tank exclusively promoting neoliberal views. It was founded in 1955, and according to Margaret Thatcher after her election in 1979 it “created the climate of opinion which made our victory possible”.
As a reservoir of neoliberal ideology one of its natural targets for attack is the NHS, which the IEA dismisses as “one of the most overrated, inefficient systems in the world”. Its ferocious promotion of a hard Brexit led to an IEA report being sharply criticised earlier this year by the Charity Commission for its obvious bias, given the alleged charity status of the organisation.
IEA has consistently refused to divulge any details of its funding, despite strong suspicions that much of it comes from overseas.
However recent research for the BMJ revealed that a significant sum comes from the tobacco industry:
“the organisation is part funded by British American Tobacco. In the past it has also taken money from the gambling, alcohol, sugar, and soft drink industries.”
As recompense for this financial support, the IEA has stridently opposed public health measures for tackling smoking, obesity and harmful drinking.
Its website admits to annual income of £1.9m, and says it has between 11 and 50 staff. The only detail it has given on its funding is to admit in 2017 “its income of £2m came primarily from unnamed “foundations and trusts” (23%), “large businesses” (23%), and “individuals, entrepreneurs and family firms” (20%).”
The BMJ investigation includes an infographic plotting the IEA’s financial links to 32 Tory MPs, and argues that the most closely and publicly associated ideologically with the IEA is one-time Tory leadership candidate Dominic Raab.
The BMA study also reminds us that although he “does not have direct links with the IEA”, health secretary (and another failed Tory leadership candidate) Matt Hancock has in recent years received funding [totalling £32,000] from Neil Record, who became chair of the IEA board of trustees in 2015.
The IEA is also well-enough connected to secure ready and frequent access to national media coverage, especially through the many well-placed right wing editors at the BBC, while those with opposing views to the IEA seldom get a look in. Its young American associate director Kate Andrews has become a regular interviewee or participant in various news-based outlets, especially the BBC.
A professional 2-minute video of Andrews summing up the IEA’s view that after 70 years “It’s time to overhaul the NHS and replace it with a system fit for 2018” was produced by Newsnight.
Essentially the IEA rejects the basic structure and values of the NHS, and advocate insurance-based models. Their criticism of the NHS basically always reiterates the same points, so it’s worth examining the accuracy and relevance of the claims made.
Andrews always works to the same basic list of countries whose systems she points to as more effective and preferable to the British NHS. The list includes Australia, Belgium, Netherlands, Germany and Switzerland.
All of these countries spend much more money per head of population than the UK. According to the latest OECD figures, Australia spends 12% more per head; Belgium (never cited by anyone other than the IEA as a model health care system) spends 15% more; Netherlands 28% more, Germany 32% more and Switzerland – one of the highest spending countries after the USA – 89% more per head than the UK. And of course the UK average is higher than spending in England.
Significantly increased levels of spending facilitate increased investment in staff, and in diagnostic equipment. The UK also has less than half the OECD average provision of MRI scanners, and less than a third of the OECD average of CT scanners (only Hungary and Mexico have lower provision). These are key in early detection and treatment of cancer; but a common criticism of the NHS by the IEA and similar organisations is that other countries outperform us on treatment of cancer.
Another factor in our lower spending is the low level of provision of nurses and doctors, where the UK is well below all of the IEA’s chosen comparisons. Our provision of hospital beds is 4th from the bottom of all the OECD countries. This same point has been widely raised, for example by a recent Nuffield Trust report.
The IEA dismisses and ignores the US-based Commonwealth Fund’s comparison of 11 different health care systems, which has consistently ranked the UK as the best overall performer despite the relatively limited spending. Belgium is not included in their comparison, Australia comes second to Britain, Netherlands third, Switzerland sixth and Germany eighth.
The Commonwealth Fund study, which also has significant weaknesses, is based on five key measures – Care Process, Access, Administrative Efficiency, Equity and Health Care Outcomes. The UK comes third on access and efficiency, tenth on outcomes, but top on care process and equity – largely because of the way in which it has been structured without up-front charges for care.
These issues are of no concern to the IEA. While it claims its favoured models give “universal access”, its preferred systems are all very different, highly complex social insurance systems with much higher levels of charges for treatment.
Switzerland is one of the wealthiest countries in Europe, yet the proportion of private ‘out of pocket’ spending on health is exceptionally high at 26% of total health spending. This means that low and middle income households pay a higher proportion of their income for health care than the richest.
Swiss patients wanting health care have to pay a “deductible” (fixed amount to be paid before insurance cover begins to reimburse costs) as well as a copayment (a percentage of the cost of treatment) which cannot by law be covered by insurance.
There is a £12 per day fee for hospital inpatient treatment. Mandatory health insurance does not cover 90% of dental costs, or some outpatient treatment such as psychotherapy.
Far from giving the same coverage or better than the NHS, the Swiss system costs more and is much unequal.
In Germany health budgets are controlled by an immense bureaucracy of 132 different “sickness funds:” but the system is not a universal one covering all citizens. There is a separate system of insurance for the highest paid (earning above €4,050 per month). These people with above average wealth also tend to have above average good health.
Separating them out so they do not contribute to the costs of health care of those on lower incomes, allows them to pay lower contributions, despite entitlement to higher benefits. This means that the population with least means and highest risk of ill health are left in a separate system. This is very different from the British system based on progressive taxation.
The IEA is very keen on the Belgian system, but the whole Belgian population, 10.7 million, is not much bigger than London. However one very striking difference is that the Belgian health budget is fixed by legislation which requires it to grow in real terms each year.
If this applied to the UK, our health spending would already be significantly higher, after 9 years of austerity levels of funding. Belgium also has far higher out-of-pocket costs than the UK.
The Australian government subsidises private health insurance, spending $6 billion every year to give tax breaks to those with insurance, even though private treatment costs are notoriously inflated and the same money could open far more public sector hospitals and improve the service to all. As in so many countries it’s the publicly-funded hospitals that carry most of the burden of emergency and complex care.
The Netherlands system scores highly in many comparative studies, but it is one of the most expensive, seventh largest spend per head. The complex combination of mandatory and voluntary health insurance also means that costs fall disproportionately on low and lower-middle income individuals, who end up paying between 20-25% of their income in healthcare costs: this is far less equitable than the UK system. Competition has increased the bureaucratization of the healthcare system, with over 1400 different insurance packages, making choice for consumers extremely complicated.
More recently the IEA has begun to throw in some completely different examples, such as Hong Kong and Singapore, which again are very different systems for small populations.
Hong Kong has a population of 7.3 million – less than London – and a health care system that is funded from general taxation – but at a rate of 6.1% of GDP (just over £2,000 per person), so the health budget does not cover all of the costs of the service. As a result there are user fees for hospital care, including emergency care. In addition the under-funding and inadequate provision of hospital care means there are long waiting times for treatment, with delays of up to 20 hours for emergency admissions, from 36 to 110 months wait for a joint replacement, and a six month wait for outpatients – much worse than the NHS. There is a developed private hospital network, but the charges are prohibitive for the poorest.
Singapore is an authoritarian city-state, with an even smaller population (5.6 million), and spends just 3% of its GDP on health. It does not offer universal or comprehensive health coverage: unlike the NHS, services are only subsidised from general taxation, and subject to means tested charges, with no annual cap on out of pocket spending.
Hospitals advertise their charges so that patients can decide whether or not they can afford to access treatment. In 2013 more than two thirds (69%) of Singapore’s health spending was private spending, and the vast majority of this (88%) was out of pocket spending by individuals, the most regressive way to pay for health care.
Copayments, deductibles, and restrictions on the uses of health insurance schemes (Medisave and MediShield) to cover costs of consultations, treatments, and procedures are all designed to discourage unnecessary doctor visits, tests, and treatments and keep health care “demand” in check. However each of these has greatest impact on people on the lowest incomes who are also most likely to suffer illness and need health care.
So it’s clear the IEA consistently favours high cost, insurance-based schemes with significant spending on bureaucracy.
They pay no regard to the impact of user fees on the poorest, and seem unconcerned with the need for universal or comprehensive services.
Perhaps most important, they are quite happy to criticise poor outcomes from the British system without discussing the very substantial additional cost – to government and to individuals and their families, especially those who would face hefty charges – of changing over to any of the IEA’s preferred models.
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