The Health and Social Care Bill

A Cause for Urgent Action
Linda Kaucher

The Health and Social Care Bill, which has just been the subject of the biggest rebellion this government has yet seen, and which is now due to be heard in the House of Lords, will end the role of the NHS as a universal health care system and shift the nature of our health care to a market-based service.

Although the NHS has been a global model for financing, organization and delivery since it was conceived in 1946, it is set to change definitively with the passage of the Bill, and similar health service ‘reform’ is occurring across Europe.

While a lot of privatisation in public services has already occurred here, now it’s the turn of the NHS and of education to be hit hard. If the essentials of the UK NHS are lost, not only will the model for health services elsewhere be eliminated, but also the reforms would become a model for the fate of other UK public services.

The US health industry is targeting UK and other European health services for market entry. Because corporate profits from health and education have dropped in the US itself, the multinational finance institutions behind the industry need other markets opened up, and Europe, where up to 20% of national budgets are spent on health and education, is the jewel in this regard.

Until now, these services have for the most part been shielded from the marketplace.

Internationally, markets in these service areas are being opened up to multinational corporations through World Trade Organisation (WTO) Agreements such as the General Agreement on Trade in Services (GATS), under which the liberalisation of the whole spectrum of services is being pushed forward, and through the Trade Related Intellectual Property Agreement (TRIPS) with its international monopolizing of markets through patenting.

But domestic ‘reforms’ are needed for this liberalisation to go forward. For instance services can’t be liberalized, that is opened to the entry of multinational corporations, under GATS, until they have been privatized at the national level.

Service privatizations have been forced on developing countries through Structural Adjustment Program (SAPS) conditionality on loans. Poor countries have been forced into privatising public services in order to get International Monetary Fund (IMF) / World Bank (WB) loans.

In Europe, and especially the UK, which has led so much in privatising public services, governments are doing it voluntarily. While it may suit corporate lobby groups, it is against the will of the people, and against the basic structure of the NHS as set up in 1947/48 - to have a health service outside of the market.

The 90 Acts of Parliament concerned with the NHS since the 80’s, seen as ‘turbulence' in the health service, have actually created a gradual incrementation towards a market structure. Countries such Portugal, Spain and Greece are on the same path.

No country in the world delivers universal health care, or education, in a market driven system. Still, Prime Minister Tony Blair, in a recent meeting with business leaders, indicated his intention to open all aspects of the Health Service to the private sector.

The most controversial aspects of the Health and Social Care Bill are Foundation Trusts, and the role of Regulator, which will replace that of the Secretary of State. Instead of the accountability enshrined in the Secretary of State role, the function of the Regulator will be to operationalise the market.

The regulatory function of the Strategic Rail Authority has produced cuts in services and price increases. With postal services it has meant a breaking up of the ‘monopoly’ that allowed for profitable sections to subsidise less profitable parts of the service, a change in the universal service obligation, and job losses.

The Bill now refers to ‘Foundation Trusts’. ‘Foundation Hospitals’ proved too hard to sell to the public and those elected to decide on the Bill. Presently the Foundation Trust proposal is poorly understood - but it is about moving towards a full marketisation of health.

Foundation Trust is a new legal form and anyone can apply to become one. A Trust will have an elected Board, but no shareholders, and whereas, previously, budgets were delegated to health managers, Trusts will be expected to make a surplus, with that surplus distributed back into the Trust.

The Trust’s obligation will be to provide the services that the Trust is licensed to provide, efficiently and effectively - but without the requirement of universal service.

How can a surplus be achieved?
There will be NHS income and non-NHS income, which could include private patients, charged services like car parking, and marketing concessions. Expenditure will include staff costs, services, goods - including pharmaceuticals, and capital expenditure.The Bill has a supposed cap on involvement of the private sector, locking out shareholders, and with limits to the private finance that can be raised.

However, in activities below the Board level, there is plenty of scope for private sector involvement. The Trust can enter into joint ventures for example, or a private company could use a part of the premises. So while Board members cannot make a profit, and Trusts’ profits must go back into the Trust, it would be a profit venture for the private sector partner.

Another mechanism for private sector involvement is direct sub-contracting. The operations of the Trust could be broken up, as they have been with the Strategic Rail Authority and with postal services, and parts of the service subcontracted. The Bill allows for this to happen.

Foundation Trusts, which will be public corporations, are being presented as a model of local ownership and control, co-operative in nature, with a strong emphasis on grass roots and on democracy, but who will actually control them.

Control has rested with Health Authorities - the NHS has in fact been very decentralized in this regard - but when the Bill becomes law, decision making power will rest with the Regulator, not with local people.

The process is for a Trust to apply for authorization, and during that time consultative processes are suspended. If the authorization is granted, then the Trust applies for a license. The Regulator decides which services the Trust can provide and how they will be provided. The Regulator will be outside of Parliament, and with huge power.

So while the present system provides for a rather weak watchdog through public health trusts, under the new system there will actually be no local ownership or control, and no requirements to consult. Thus it is a sham.

There is also the question of who will be on the Boards of Foundation Trusts. Anyone can be a member of Trust for 1 pound. This could include staff, the local population, or patients. There is no geographical stipulation, so members are not necessarily local, and there is no user requirement. People with criminal records, however, will be excluded. Membership, for those who take it up, confers no user rights, only the right to vote for the elected half of the Board.

The other half of the Board members will be co-opted; they could be company representatives. This opens the way to the possibility of regulatory capture by those with vested interests.

The fact of membership, with its exclusions, is in itself a shift from universal entitlement.

The universality of the Health Care Service has been a duty of the Secretary of State for Health, but in the Bill, the Regulator only has the duty to act in manner suitable to a Secretary of State. Thus the principles of universality and equity are lost with the passage of this Bill. Although we tend to take the concept for granted, universality is not a given. In the US, a ‘developed’ country, 60 million people go without health care.

The Government has also claimed that the Bill will not mean charges for health services. However, when the sole duty of a Foundation Trust is to make a surplus, the pressure to save money will be intense, in staffing policies, and in the mix of goods and services purchased. In terms of services provided, services for the old and the chronically sick are obviously not profitable when income relies on the number of patents in, and out. The Trust will be able to apply to the Regulator to vary the obligations of provision in its license on the grounds that it can’t make a profit.  Cherry picking of services is inevitable, as has occurred with postal and other services.

New guidance on time limits for care was given to the NHS one and a half years ago. For instance after 6 weeks of care for a stroke patient, there has to be an assessment, with a possible reclassification of care status from intermediate care, which is a NHS provision, to personal care - a category which is non NHS and is charged. This leads to shorter hospital stays. In the US there has been an outcry against drive-by, outpatient mastectomies and childbirth. Because of the need to turn a profit, Foundation Trusts will pay close attention to time limits.

Foundation Trusts are set to be unaccountable and non-transparent, and whatever the basis on which Board members take up their positions, the Board will need to behave like a business.

While there have been government guarantees about charges, there are already strong mechanisms in place to move things in that direction. There is already a blurring of boundaries between clinical care and commercial services, with ‘for profit’ companies involved in health service provision.  Private companies like Boots and BUPA already sell top-up insurance, and deals for better levels of care. The Bill and the setting up of Foundation Trusts will see a huge leap forward in the shift to an environment of pick, match, choose, and, like electricity and gas supply services, it will be caveat emptor – buyer beware.

Staff costs, 70-80% of health budgets, are the most likely target for Foundation Trusts reductions. From a workers’ perspective, the NHS has national terms and conditions, though these can already be changed, and they have been lost for hospital ancillary staff etc. With Foundation Trusts there are no guarantees to workers. It appears that major worker representative bodies like the British Medical Association, the Royal College of Nursing, the GMB and UNISON have been hoodwinked on this, perhaps for some of them through their closeness with the Labour Party. A clause in the Bill excludes Foundation Trusts from all existing labour agreements.

There are, of course, existing geographic inequalities in health care provision, though the centralized funding nature of the NHS tends towards equalising them. However, this inequity will greatly increase with the legacy of different asset bases of Trusts - an historic accident- and be further exacerbated as differing assets differently affect leverage for private finance.

Previously assets went back to the region, for the community as a whole. Now Foundation Trusts will get those assets - to possibly liquidate for equity, or utilise for joint ventures. Decisions regarding assets will be made by the Regulator.

Decisions will certainly need to be made about the many PFI hospitals which are in the pipeline and won’t be completed for several years. Will they acquire assets such as the land they will occupy, cheaply? The potential for corruption, in the disposal of public assets, is immense. The government will be able to vary the asset base, and the value of it, and give concealed concessions.

All in all, we are seeing the path prepared and indeed the legislation processed, for a wholesale privatisation of the NHS. This is a political decision, to deliberately move this national resource, a form of real security, to the private sector. In the process we are set to lose sovereignty over the service because, as a marketable commodity, health services will become subject to competition policy and to international trade rules.

In the US, not-for-profit Health Maintenance Organisations, which were started with an insurer-plus-provider function, to fill the gap for the huge number of people with no health care, were eventually floated on the share market, first making big profits and then big losses. This is a major part of the reason that US health care investors have turned their sights elsewhere. This has devastated universality in Latin America, and Canada, where the health service is on a provincial, not a national basis, is very vulnerable. The same tactics of gradual erosion through PFI and PPP are being used.

The largest US health care provider, United Health Care, is already contracted here in the UK to provide intermediate care, and private companies are entering the market with diagnostic treatment centers and elective surgery.

The NHS can be actually reformed and improved - but not by handing it to private corporations. Demand on the health service is not ‘unlimited’, an ‘aging population’ as far as this is the case, can be planned for. Abandoning universal health care will not promote ‘a healthy society ‘ in any sense.

The current Bill is not amendable. It is expected to have a “rough ride” in the House of Lords but no government initiative has yet been rejected by parliament. The fact that John Reid has been put in charge shows that the government are taking no prisoners. It can be held up but, if necessary, the government can use a Parliament Bill to force it through. Campaigners are not optimistic. But, they point out, it is never too late. Any attempts made to halt this Bill, they say, are worth it, considering the historic dismantling of the NHS which it proposes.

This article has been partly written from a talk by Dr Allyson Pollock, Public Health Policy Unit, UCL.