NCPA - National Center for Policy Analysis


July 14, 2010

The United Kingdom's new coalition government, grappling with weak public finances and rising health care costs, announced an overhaul of the state-funded health system that it said would put more power in the hands of doctors and save as much as $30.12 billion by 2014. 

The revamp essentially involves cutting huge swaths of bureaucracy and reinvesting the savings in urgent health care services.  As a result, the government said, it will still increase National Health Service (NHS) spending in real terms every year for the next five years. 

  • In one of the biggest changes, the government said it plans to eliminate a layer of financial managers and ask doctors instead to decide how the bulk of the National Health Service's $159 billion annual budget should be spent.
  • A central committee will allocate budgets to groups of general practitioners in each region, who will decide how the money is spent on the local population.
  • The government didn't say how many management jobs will be cut, but said the plan would reduce management costs by more than 45 percent over the next four years.  

In a 60-page document outlining the overhaul, the government said the changes "will cause significant disruption and loss of jobs ... but it has rapidly become clear to us that the NHS simply cannot continue to afford to support the costs of the existing bureaucracy; and the government has a moral obligation to release as much money as possible into supporting front line care." 

The NHS says it is the largest employer in Europe, with more than 1.3 million employees.  Health care experts called the plan one of the biggest shake-ups in its 62-year history. 

Source: Jeanne Whalen, "U.K. Will Revamp Its Health Service," Wall Street Journal, July 13, 2010. 

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