Calls to scrap NHS and replace with Social Health Insurance system

The Institute of Economic Affairs (IEA) has called for a radical transformation of the National Health Service (NHS), proposing it be replaced with a Social Health Insurance (SHI) system to improve healthcare outcomes in the UK.

According to a new IEA paper, shifting to an SHI model, similar to systems in countries like the Netherlands and the Czech Republic, could bring the UK’s healthcare performance in line with other European nations.

The report highlights that attitudes towards the NHS have shifted dramatically, from “source of national pride” to 29 per cent of Britons having told YouGov that the NHS is worse than healthcare systems in Europe.

The growing dissatisfaction with the NHS has been well documented, resulting in a surge in people turning to private health insurance. It was reported earlier this year that private health services were expected to see over 900,000 private admissions in 2024.

Prime Minister Keir Starmer has acknowledged the NHS’s challenges, warning that a series of major reforms to the NHS will “take a decade” and won’t be “universally popular”.

The free-market think tank’s proposal suggested that the introduction of market competition through an SHI system could improve patient choice, reduce waiting times, and raise standards across the board.

SHI systems, which rely on regulated competition between private insurers and healthcare providers, are already in place in many European countries.

The IEA’s report argues that this model would allow for greater flexibility and innovation in the UK’s healthcare system while maintaining access for all, with government support for those unable to afford insurance.

The proposed reforms aim to gradually shift the NHS to an SHI system, allowing the UK to adopt best practices from Europe without completely dismantling its existing healthcare infrastructure.

This paper comes days after Lord Darzi’s damming report which made clear the NHS is in critical condition; and ordered that it must accept help from the private sector now.

Kristian Niemietz, IEA editorial director and lead author of the report, said: “Until not even three years ago, the NHS used to be Britain’s most revered sacred cow, and criticising it was the ultimate social taboo.”

“We have now reached a stage where pointing out that the grass is greener on the other side is no longer good enough. What I try to show in this paper is how we can grow some of that greener variety of grass here, on domestic soil,” he added.

However in a speech on Wednesday the health secretary vowed to take on “both left and right-wing orthodoxies” as the government works to reform the NHS.

Wes Streeting said Lord Darzi’s recent independent review of the health service was “not a left-wing or a right-wing view of the NHS. It told hard truths to both sides of the debate”.

He added: “Unless we do public health reform, the right will have to accept higher costs for healthcare, paid for by higher taxes. I don’t think that’s a price working people can afford to pay.

“The left has to accept reform, or there will be no health service. At least not as we currently recognise it.”

A Department of Health and Social Care spokesperson said: “Lord Darzi’s investigation found nothing that ‘draws into question the principles of a health service that is taxpayer funded, free at the point of use, and based on need not ability to pay’.

“The NHS needs fundamental reform, but as the Secretary of State has repeatedly said, we remain committed to providing a public service, free at the point of use.

“Lord Darzi’s findings will inform our 10-year plan to deliver the care patients need by radically reforming the NHS and building a health service that is fit for the future.”