Start with the GPs

Primary care is a significant minority of healthcare costs (around 15% of the spending of Primary Care Trusts, whose budgets constitute 75% of all healthcare spending). It is made up of relatively small-ticket items experienced to some extent by most people in most years, compared to the big-ticket items of secondary or tertiary care that are experienced by only a minority of people in any year. This makes primary care a good place to start re-establishing price signals, as the equitability issues are smaller and can be dealt with relatively easily.

We propose that £100 per year should be included within the Basic Income, additional to the level it would otherwise be set at, as a contribution to primary-care costs. Each person would be expected to pay for the first £100 of primary care that they needed in any year. Those who looked after themselves and were lucky would be some proportion of that £100 better off each year.

Protecting the vulnerable

Some people, particularly the elderly, would require more than £100 of primary care in a year. We recognize that old people feel vulnerable to suggestions that they may have to pay for the health costs of which they know they are a substantial part, and resentful at this being suggested when they were told (deceived) that they had been contributing all their lives through National Insurance to the care that they now need. To respect these fears and expectations, we would provide that GP services would remain free (after the first £100/year) to anyone born in or before 1950, and half price (after the first £100/year) to anyone born between 1951 and 1960.

Younger low-earners with chronic health needs or disabilities that require regular GP visits might also feel vulnerable to this system. Their costs over the first £100 should also be publicly-funded, on a means-tested basis (gently-graduated to minimize the disincentive to work that always accompanies means-testing). It could, for example, be specified that people would be expected to contribute at least 5% of their earnings to primary-care costs, with anything above that covered by the public purse. The doctor would have to vouch for the necessity of the treatment, and the patient for their need for support. The system should be subject to audit and random investigation, with severe sanctions on anyone (doctor and patient) found to be abusing the system.

Privatize GP surgeries

The above assumes that GPs would now be charging market rates for their services. All GP surgeries would be privatized as partnerships. GPs and businessmen would be free to setup new surgeries, as partnerships or on a different commercial basis (e.g. limited-liability company). Partnerships would be able to modify their status (e.g. to a limited company), or to sell the practice to an investor, on unanimous agreement of the partners. They would set their own prices for their services, and control their register of patients, with only the proviso that they would be required to accept patients within their catchment area who could not find a place at any other practice.

A system would be instituted through which GPs could claim the costs of eligible care that was not paid direct by the patient (i.e. those provided at public expense under the above provisions). The claimable amount would have to be on a scale specified by government rather than simply at the rates charged by the surgery, to avoid the temptation for high-priced surgeries to attract large numbers of eligible patients.

Tax revenue neutrality

As most people would use most of the £100/year for primary care in most years, the cost of this addition to the Basic Income would represent not an additional amount of government expenditure, but a re-routing of part of the healthcare budget (from direct payment to GPs, to indirect payment via patients). The marginal cost of additional support under the above categories (elderly and low-earners) would be balanced to some extent by the additional revenue brought in by higher earners with primary-care needs of over £100/year making a larger direct contribution to their healthcare costs. And there would be an additional benefit to overall costs, as unnecessary visits would be deterred by the charges.

This could be implemented relatively quickly, while the ground was laid for wider exposure to price signals within the healthcare system. One step of use both to primary-care costs and to wider self-provision would be the establishment of Health Saving Accounts.