Evaluation of NHS Funding and Considering Alternatives

Several commentators have suggested that the way the NHS is currently funded is no longer appropriate. What alternatives are possible and, on balance, which would you recommend?


Priti Patel MP, in his words, said that

“In terms of general taxation, we pay for the NHS through our taxes and that will always continue”.

The NHS England


, almost 68 years after it was launched in 1948 is funded mostly through general taxation and the contributions from National Insurance system. Since then, its founding principles and long-held ideal remain intact up to date and that is: good healthcare should be available to all, regardless of wealth and remains free at the point of contact. But, as complex as any health organisations can be, the NHS is not spared to any unprecedented challenges. One of which is financial funding in order for the organisation to thrive and to be able to provide the best healthcare service to the British people. Additionally, according to the Office of National Statistics


, the UK has an ageing population – around 18.2% were estimated to be aged 65 years or over and is anticipated to increase by 20.7% by the year 2027. This contributes to a more pressing problem that the NHS is facing. Ultimately, for many aspects of society including policy areas in health and social care, this could present both opportunities and challenges.

This essay will briefly present alternatives on how the NHS can be funded and would rather focus the discussion on how the system should be organised in order to address financial challenges.

How is the NHS in England funded?

Although general taxation supplemented by National Insurance contributions still accounts for around 80% of NHS funding


, the was the intention to boost the NHS funding through the increase in National Insurance rates in 2001.

Other funding is generated by user changes that includes prescriptions, dental treatment and spectacles which were first introduced in the early 1950’s. Arrangement for exemptions are considered to those patients under the age of 16 and over 60, as well as those who are recipients of specific state benefits.

In the overall NHS income, these account forms only a very small proportion. An example of which was the £1.3 billion income between the years 2015-16 from patient fees and charges for prescriptions and dental care. Another small income generating source for the NHS is from parking charges and land scales. The Health and Social Care Information Centre


in 2016 said that these exemptions has resulted in 90% of all prescription items dispensed freely.

In a study by Hawe and Cockroft (2013), contributions from these sources has fluctuated over the years. An example of which is the proportion of income from user charges that was 5% in 1960 down to 1.2% only between 2007 to 2011. Further, LaingBuisson (2017) stated that 10.6% of the population across the UK are held by private health insurance policies where the employees are offered an overall remuneration package that includes most corporate subscriptions.

However, for the NHS to receive and maintain its original funding, general taxation funds are allocated, especially in occasions where the national insurance income or patient charges fail to raise enough funds to keep the health system operating.

How can the NHS meet its growing cost?

According to the report by the Institute of Fiscal Studies, in 2020, the funding for the NHS will need an extra £20 billion. At present, 23% of funding from the government is allotted for the NHS and unlike any other departments, the NHS is usually spared from any cuts in budget. Charlesworth & Johnson (2018) reported that the increased in the cost of the NHS is due to the following factors:

  • The NHS struggles to address the issue of the ageing population and their need for more treatment. As identified in 2017, almost 50% of the costs are provided during the last year of a person’s life. This greater burden on the NHS treatment was placed by the ageing population according to William, S. et al (2009)
  • Expensive medicines are increasingly available
  • The advent of social media and information technology has led to increase expectations from the patients
  • There is an increasing number of health problems related to lifestyle, e.g. heart disease related to obesity

What are other alternatives for funding the NHS?

Charging more for some services

The principle of free healthcare services at the point of contact is deeply embedded in the NHS culture since it came into operation in 1948. Since then, the British people are holding on to the governments promise that the NHS is created to “relieve the money worries in time of illness”.

However, prescription and subsidised charges for dental treatment have been given to the people since 1952. It will be an effective way to raise money when patients will be charged, but it dares to challenge the principle of free healthcare at the point of use. The decision on what services should be free is a continuous dilemma. Additionally, there is an issue of providing means-tested charges and to ensure inclusivity regardless of socio-economic status.

On the other hand, Pollock, A. et al (1999) mentioned a report from the Norfolk and Norwich full business case stated that,

“East Anglia has a very high incidence of private medical insurance (21.3% in comparison with a national average of 13%). There are clearly opportunities for the Trust to expand its income from private patients. The Trust already provides 18 private beds and generates £1.65 million in annual income from this sector of the market.”

Moreover, a study by Hanefield, J. et al (2013) highlighted the large numbers of inbound medical tourists in some of UK’s internationally known large hospitals that are highly considered for their specialism. First among the list is the Great Ormond Street Hospital for Children NHS Foundation Trust which reported an income of over £20 million from 656 patients. The study also found out that despite the differences in the number of patients who visited different hospitals which is comparatively small to the income generated from them – being 7% of these patients generated a close to 25% of private income. These figures suggest that non-UK residents travel to seek expensive and high-end specialist procedures that in turn, will generate substantial revenue.


It is estimated that given the situation in the next 15 years where NHS funding will increase at around 3.3-3.5%, taxation will certainly rise as a result. This is modelled together by the Institute of Fiscal Studies (IFS) and the Health Foundation. The Director of IFS, Paul Johnson, in his words said,

“If we are to have a health and social care system which meets our needs and aspirations, we will have to pay a lot more for it over the next 15 years. This time we won’t be able to rely on cutting spending elsewhere – we will have to pay more tax.”

An example of meeting this need are the modest improvements in the NHS services that includes tackling the constant problem in the A&E of meeting waiting time targets and the underfunding in services for the mental health sector which requires an increase in funding between 4%-5% per year. Additionally, Wenzel et al (2018) said that the spending for adult social care will have to rise by 3.9% per year for the next 15 years because of the growing ageing population.

These are some of the identified alternatives in order to save the NHS funding. However, as much as these will bring benefits, many are questioning its sustainability with some even appalled to the detrimental effects it would bring to the general population. The NHS Long Term Plan seems to be the most sustainable and wise decision in order for the NHS to survive and meet the challenging demands of healthcare delivery. The plan brought a new birth to Integrated Healthcare System in the NHS. On balance, my personal recommendation is that the source of funding for the NHS remain unchanged. However, to change the system into an integrated healthcare delivery system provides a promising future for the NHS.

Integrated Healthcare System

In the English health policy, the integrated health and social care services are a well-established aspiration providing a seamless service of care delivery according to the Department of Health. Lewis, RQ, et al (2010) identified 2 types of integration; vertical – where organisations that deliver different services come together and horizontal – where similar services from organisations integrate. Naylor, M. (2002) and Ham, C. (2011) mentioned that integrated care will benefit the ageing population that frequently in contact with health professionals for their conditions. Also, these specific group of vulnerable population undergoes frequent care transitions between different services according to Hanratty, B. et al (2012) & Ellins, J. et al (2013).

Nigel Edwards, Chief Executive for health policy of the Nuffield Trust, said,

“Achieving the kind of radical change that the NHS England Five Year Forward View outlines will require doctors, nurses and social care workers to work together in fundamentally different ways. This kind of change takes time and is heavily dependent on whether or not they have a trusting, functioning relationships.”

This kind of relationship was previously highlighted by Howarth, M et al. (2006) with their strong suggestion for role awareness and effective communication built on trust between professional groups within the team. Kodner and Spreeuwenberg (2002) stated further that without integration, all aspects of care will suffer because patients will get lost in the system, services are either undelivered, duplicated or delayed. This results to the decline in the quality of care and diminished cost-effectiveness.

Evidence on the effectiveness of Integrated Care

NHS England with its five year plan has published a review in 2017 that describes an example when integration is being put into practice. And it said,

“Early results from parts of the country that have started doing this – our ‘vanguard’ areas are seeing slower growth in emergency hospitalisations and less time spent in hospital compared to the rest of the country

”. Aaltonen, M. (2012) mentioned that the difference has been particularly noticeable for people over 75’. These so-called ‘vanguard’ areas are the group of people leading the way in new developments to improve the care in the NHS received by millions of people across England



Also the review stated there are 50 locations around England, who had been in these vanguard areas and statistical report suggested the initiatives were having a positive effect. An example of which is per capita emergency admissions growth rates of 1.1% in primary and acute care services (PACS) vanguard areas. Additionally, there is also a report of 1.9% in the multi-specialty community provider vanguard areas compared to others where the growth can be averaged to 3.2%.


Considering these vanguard areas, Lord Darzi’s report for the Institute for Public Policy Research suggested that they were

“islands of success [which] speak to a wider failure to adopt this approach at scale and universal basis”.

Curry & Ham (2010) also stated that integration can also bring together responsibility for both the commissioners and providers. When this happens, individual managers and clinicians are able to use their budgets in two ways, the so-called ‘make or buy’ decisions where either – directly providing more services or commissioning these from others.

Moreover, there are pioneer programmes for integrated healthcare implemented in some of the Trust across England.

  1. Eastern and Southern Cheshire – developing transitional care through the Short Term Assessment and Intervention Recover and Rehabilitation Service (STAIRRS) is an integrated community rapid response service. Through a centralised ‘hub’, health and social care assessors can assess a variety of integrated services. Patients and carers can then be provided with alternatives to traditional hospital and other bed services.
  2. Greenwich Coordinated Care – based from a patient’s story. Tom, a 45 year old man and a resident from Southeast London, had been living with chronic obstructive pulmonary disease (COPD), diabetes and a psychotic disorder for several years. He has a history of social problems such as gambling and lived in an over-crowded flat. Due to this complex issues, his situation has vastly contributed to his health condition. He is a frequent visitor to his GP and a highest attender at the A&E. His GP made the decision to refer him to the Greenwich Coordinated Care who later worked with him to identify his needs in terms of “I” statements for example, “I would like to stop gambling”. An action plan was agreed involving London Fire Brigade to help with clearing accommodation, a psychologist to support Tom and help with anxiety, housing to look at his accommodation and a GP to review his medication. This has led to reduced number of A&E attendances, improved management of long term conditions and improved living conditions for Tom.
  3. South Devon and Torbay’s ‘Newton Abbot Frailty Hub’ – their mechanism of healthcare delivery includes service provision to the top 2% of identified high risk patients. Their aim is to support these people in coping with the challenges of natural ageing and overall, to live well. A single point of contact together with a single assessment document and only members of the multi-disciplinary team has access to these records. This team has 24/7 full access to mobile GP’s and support from different speciality like geriatrics, palliative/end of life care, mental health, social care and pharmacy. Additionally, new posts have been created such as joint health and social care coordinator to facilitate the process. As a result of the initial feedback, GP’s have reported a decrease in admission to the hospital A&E department because the majority of calls have addressed their current issue. It has been overwhelmingly positive so far.


There is a need for the NHS to change its overall system of healthcare delivery to possibly counteract the massive increase in spending which in turn requires an increase in funding. Integrated healthcare seems to be a promising solution, but the government needs to identify the key barriers to integration in order to establish good governance and oversight. Whilst there are positive examples of integration at a local level and from other Trusts and vanguard areas across England, everyone can learn from it and look at possible options of implementing them at a national level. There needs to be a strong relationship based on communication and trust between organisations and professionals within the team.

Through this, the health and social care service will not only establish its financial stability and sustainability, but also deliver the best healthcare solution centred on the needs of the general population.


  • Aaltonen M, Rissanen P, Forma L, Raitanen J, Jylhä M. The impact of dementia on care transitions during the last two years of life. Age and Ageing 2012;41:52–7.
  • Charlesworth, A., Johnson, P. 2018. Securing the Future: Funding Health and Social Care to the 2030’s. Institute for Fiscal Studies and Health Foundation, pp. 107.
  • Department of Health. High quality care for all: NHS next stage review final report. London: The Stationery Office; 2008
  • Department of Health. Transforming community services: enabling new patterns of provision. London: The Stationery Office; 2009
  • Ellins J, Glasby J, Tanner D, McIver S, Davidson D, Littlechild R, Snelling I, et al. Understanding and improving transitions of older people: a user and carer centred approach. Final report. NIHR Service Delivery and Organisation programme; 2012. [Cited 2013 Dec 17]. Available from:


  • Ham C, Imison C, Goodwin N, Dixon A, South P. Where next for the NHS reforms? The case for integrated care. London: King’s Fund; 2011
  • Hanefeld, J., Horsfall, D., Lunt, N., Smith, R. 2013. Medical Tourism: A cost or benefit to the NHS? PLoS ONE 8(10): E70406. Doi:10.1371/journalpone.0070406
  • Hanratty B, Holmes L, Lowson E, Grande G, Addington-Hall J, Payne S, et al. Older adults’ experiences of transitions between care settings at the end of life in England: a qualitative interview study. Journal of Pain and Symptom Management 2012;44(1):74–83.
  • Howarth M, Holland K, Grant MJ. Education needs for integrated care: a literature review. Journal of Advanced Nursing 2006; 56(2):144–56
  • Kodner D, Spreeuwenberg C (2002). ‘Integrated Care: Meaning, logic, applications, and implications – a discussion paper’. International Journal of Integrated Care, vol 2, Available at: www.ijic.org/index.php/ijic/article/view/67 (accessed 08 June 2019).
  • Lewis RQ, Rosen R, Goodwin N, Dixon J. Where next for integrated care organisations in the English NHS? London: The Nuffield Trust; 2010
  • Lord Darzi, Better Health and Care for All. Institute for Public Policy Research, June 2018, pp. 40-8.
  • Naylor M. Transitional care of older adults. Annual review of nursing research. New York: Springer Publishing Co; 2002.
  • Pollock, A.M., Dunnigan M.G., Gaffney, D., Shaoul, J. 1999. Planning the ‘new’ NHS: downsizing for the 21



    The private finance initiative. British Medical Journal,

    vol 39, pp. 179-184
  • Wenzel, L., Bennett, L. Bottery, S., Murray, R., Sahib, B. 2018. Approaches to social care funding: Social Care funding options. Health Foundation
  • Williams S, Nolan M, Keady J. Relational practice as the key to ensuring quality care for frail older people: discharge planning as a case example. Quality in Ageing 2009; 10 (3): 44–55





10/June 2019)


OHE guide to UK health and healthcare statistics (2013)

Department of Health annual report and accounts 2015/16


Health and Social Care Information Centre (2016). Prescriptions dispensed in the community: England 2005-2015 [online]. NHS Digital website. Available at:


(accessed on 28 March 2019).


NHS England, Next Steps on the NHS Five Year Forward Review, March 2017, p. 5.


ibid, p. 16.