Professor Alan Maynard OBE warns that faith in mutuals as commissioners is not supported by any actual evidence

The rule of thirds
Since 1997, we have had the Blairite rhetoric of the ‘Third Way’ (based partly on Etzioni), as refocused recently on the use of the ‘third sector’ of charitable and non-profit-making organisations as an alternative to NHS and commercial provision of health care.

Now the focus of relying on non-profit mutuals like the John Lewis Partnership and the Co-operative Society is shifting from the provision of healthcare to its funding.

Private insurers such as the British United Provident Association (BUPA) and Western Provident Association (WPA) collect the contributions of individuals, groups and employers, and in exchange, provide funding largely for cold elective surgical procedures such as hip and knee replacements, hernia repairs and hysterectomies.

Could this model be developed in the NHS?

Our mutual Lib Dems – six years ago …
The currently ascendant Liberal Democrats have in the past raised the nice issue of whether the funding of the NHS should be altered and the Bismarkian model of social insurance should be adopted here. (Laws, Independent, September 3rd, 2004.)

The Daily Mail today have recalled Lib Dem leader Nick Clegg’s comments on this issue from the same era, where he suggested that we might use the social insurance model of Germany, the Netherlands and Japan.

As ever, the Mail exhibits a nice degree of ignorance or partisan mis-reporting by saying that the social insurance model “would mean healthcare would no longer be free at the point of use … with patients who can afford to pay getting better care”.

Ther Mail has got its facts very wrong. In fact, care financed by social insurance funds is free at the point of use in Germany and the Netherlands, and only the rich minority can opt out to buy private insurance.

The on-going discussion of the Dutch “competition” reform is liked by those who see mutuals, or not-for-profit insurers being vehicles for NHS reform.

The 152 PCTs could be merged to create, say, two dozen large organisations that could be privatised into insurance mutuals that could compete with BUPA and WPA.

This would set the scene for us to emulate the Dutch and offer patients the choice of mutual. Each mutual would have to compete for patients and patients could join any mutual prepared to take an individual’s NHS funding contribution.

As in Holland, a complex formula would be need to risk adjust such premia, so that mutuals were not allowed to ‘cherry-pick’ or ‘cream-skim’ good risks.

Why competition is sought
For the enthusiast for competition, such a funding reform may have merit. But competition is a means to an end? What benefits would such a scheme offer NHS patients and taxpayers?

The Netherlands experience to date (where the reforms are only just beginning to alter behaviours at the margin) is that they do not improve expenditure control.

Experience internationally of private insurance shows that they generally raise premium levels by two to three times the rate of general inflation each year. They are also unlikely to improve equity or access to care of the disadvantaged.

’In principle, competing mutual insurers should be able to trade with competing providers and reduce prices and improve the quality of patient care. But evidence of such effects does not exist.‘

And efficiency?
What are the efficiency effects? As yet, the Dutch cannot offer evidence of significant efficiency effects.

In principle, competing mutual insurers should be able to trade with competing providers and reduce prices and improve the quality of patient care. But evidence of such effects does not exist.

Indeed there is a risk that pursuit of funding by ‘our mutual friends’ may divert attention from the need to erode urgently the inefficiencies of primary and secondary care providers.

Providers would welcome that, but the new government could not afford such laxity with the IMF hovering over our bankrupt economy!

’ There is a risk that pursuit of funding by ‘our mutual friends’ may divert attention from the need to erode urgently the inefficiencies of primary and secondary care providers’

Competition using mutuals requires complex and expensive regulation. The time needed to design and implement such a reform is constrained by the dire condition of the economy.

Are these nascent proposals an unwelcome and costly diversion involving emulation with “Europeanisation” of a discredited notion of “managed care” used late in the last century in the USA?

Whether they are or are not, their appeal to Liberal Democrats and Conservatives may be considerable.