The NHS and a US trade deal

It may or may not be the case that in order to facilitate a post-Brexit trade deal between the US and UK that will deliver “two and even three times what we’re doing now … everything will be on the table – the NHS, everything.” What is beyond dispute is that Donald Trump said it. Even though Trump appeared to backtrack from this position in a subsequent TV interview, he nonetheless articulated the reality of the UK’s post-Brexit choices. Without the heft that comes from being part of a larger economic bloc, the UK is going to look pretty puny in comparison to the likes of the US and China whose economies are respectively 7.3 and 4.8 times larger than the UK. Brexit supporters still cling to the fiction that the UK will be able to negotiate better deals with third countries than it currently enjoys as a member of the EU. Those with experience of conducting trade negotiations know this to be false. When it comes to opening up new markets, might is right.

This is going to put many of the contenders for the Tory leadership in an invidious position. Those who argue that the UK must leave the EU on 31 October, come what may, are in effect saying that they don’t care about the economic consequences and that the politics matters above all else. Boris Johnson has argued that the Conservatives face “potential extinction” if they cannot deliver Brexit. What he fails to point out is that they will face much the same fate if they get Brexit wrong. And risking the NHS, which is one of the few national institutions which the electorate continues to trust, would be one of the touchstone issues that could undermine them, allowing them to be outflanked by Labour. Indeed, a survey conducted by the Kings Fund found that a higher proportion of respondents thought leaving the EU would be bad for the NHS than those who believed it would be a good thing,

In what ways might a US trade deal put the NHS at risk? The most obvious concern is that US health service providers may be granted preferential access to the British market. This would imply the outsourcing of services currently provided by the state to the private sector – in other words, privatisation of large parts of the health service. As it happens, the NHS does already pay private contractors to run parts of the service. In fiscal 2017-18, almost 11% of NHS England’s outlays went to non-NHS organisations, with 2/3 of that figure going to private health providers (around 7.6% of total outlays). But figures compiled for the FT suggest that spending on non-NHS provided care has remained flat in real terms in recent years.

In the face of this evidence, why do people believe that NHS privatisation is rampant? John Appleby, chief economist of the Nuffield Trust, has suggested that one of the reasons for this is that many of the frontline services which people regularly come into contact with, such as community nursing and health visiting, already have a significant private sector presence. Nonetheless, the public would not regard further outsourcing of public services very favourably since there is a deeply entrenched view that the private sector should not make money out of the suffering of others. In addition, there is a commonly held view on this side of the Atlantic that the US health system fails to adequately look after the less well-off members of society and there is horror in some policy circles at the Trump Administration’s efforts to repeal Obamacare.

Another potential issue is that of opening up the UK market to American pharma companies, with all the attendant consequences for drug pricing. The National Institute for Health and Care Excellence (NICE) measures NHS expenditure to assess the relative cost effectiveness of various treatments against the next best treatment that is currently in use. As a result, the NHS pays significantly less for medicines from American companies than US healthcare providers. The concern is that any trade deal would be used as an excuse to ramp up the prices charged to the NHS. This fear is not unjustified. Alex Azar, Trump’s secretary of health, declared last year that the US would use trade negotiations to demand that “socialised” healthcare systems pay more since they currently pay “unfairly low fees to US companies.” This would allow a reduction in drug costs for US consumers. We should not kid ourselves that Trump’s America First policy will take an altruistic view of healthcare provision to foreign citizens – even those which supposedly enjoy a “special relationship.”

Some prominent Brexit supporters do not have a problem with the outsourcing of NHS services. Nigel Farage has recently been criticised for suggesting that those who can afford private health care should pay for it, as it would "relieve some of the burden on the National Health Service for everyone else." This is not a new position: He was recorded in 2012 suggesting that the NHS should move towards an insurance-based system run by private companies. Another hardline Brexiteer, Daniel Hannan MEP, remarked in 2009 that he “wouldn't wish it [the NHS] on anybody." It’s not exactly man-of-the-people stuff that Brexit supporters are likely to go for.

As it happens, there is a good case to be made for a grown-up debate about how to fund the NHS. But if Brexit is all about taking back control, this debate should be conducted in a cross-party manner and take into account the views of the general public. It should not be forced on the UK government as the result of a trade deal that would benefit the US far more than it would the UK.