A Larger Role for the Private Sector in Financing UK Health Care: the Arguments and the Evidence

Abstract

This article examines whether an extension of private finance would improve either the efficiency or the equity of the UK health care system. A number of arguments for increasing the role of private finance that focus on the impact of private finance on the efficiency of the public sector are examined in conjunction with empirical evidence from a number of OECD countries. The conclusion is that the case for some extension of private finance is finely balanced. There is little evidence to show that increasing private finance would improve the efficiency of the NHS. On the other hand, the evidence suggests that it is unlikely that increasing private finance at the margin will alter the support for the NHS, and thus willingness of individuals to pay taxes for public care. In addition, if private finance is supplementary, increased finance will be progressive in terms of payments for health care.