Question: Assess the economic arguments in favour of opening the NHS to a less centralised and more free market form of funding (12 marks)

Opening the NHS to a 'less centralised and more free market form of funding' would drasticly change the way in which the NHS works and it is debatable what affect this would have on the health service in economic terms. A mixed economy is one in which both state and privatised firms take part in economic activity and for Britain's health service, this would mean moving away from the current 'central' unit of the NHS, in which everyone is treated equally by the same system. Opening up the NHS would offer society a greater choice in their health care options however it is questionable which sections of society this would benefit.

In conclusion, although opening up the NHS to a less centralised system would help offer patients greater choice, it is probably not the most effective way to improve the NHS system. Everybody should have the right to make equal use of the NHS and a free market form of funding would in effect create a good quality health system for those that can afford it, and a worse off system for everybody else. Divisions would be created in a system designed for equality and economically the health service would be worse off as a result.  

1. One positive statement from the text is "boosting the UK education budget by 5.1% a year in real terms for the next three years, to take it up to 5% of national income by the end of this Parliament". I have picked this statement as I believe it will be testable once official figures become available. A normative statement from the text is "virtually all schools have been starved of resources for more than a decade," as there is no way that this can be fully tested and it is an opinion.

7. An extra £19 billion into the education system is clearly going to create improvements, however there are also other areas that the Government could spend this money arguably more effectively. One opportunity cost is that the money could have been put towards the transport system. This is an area which needs to see increased spending and a huge number of new buses or trains could be purchased. Another opportunity cost is that the money could be put into the NHS which also could do with the added spending. Greater numbers of hospital beds could be made available and more doctors could be employed to help cut waiting times.

1)In the article on the Labour Government's spending within the NHS, the three key questions that are the heart of the 'economic problem' are dealt with directly. These questions are:

1. What should be produced in the economy?
2. How should production be organised?
3. From whom should production take place?

When dealing with the first question, the issue in the article considers how the huge investment into the NHS should actually be spent (i.e. which particular areas would benefit most from additional funding). It seems clear that money is needed within the NHS as shown by the huge NHS budget increase between 2003 and 2008. The text also briefly mentions Tanzania; explaining that Tanzania has a completely different problem to the UK. It explains that in Tanzania, "significant effects can be observed through very simple treatments - rehydration salts, anti-malaria". Similar improvements and/or funding in the UK however, would contribute very little in improving the NHS.

The second question looks at how production should be organised. The article considers this in a number of ways. For example, it is discussed about whether money should be spent on smaller health centres or on larger hospitals. The text talks on how there are a variety of the current problems with the health service and explains how it is not clear cut whether funding should be used to purchase more "preventative medicine" or on facilities for "major health problems such as cancer and heart trouble" and would this meet with the UK's demand. That article tells us how it is very hard to know if the money has been used in the most effective way.

The article also relates to the final question in terms of who should benefit from the spending in the health service. The text tells us about possible alternatives to an increase in taxes to fund the improvements. Greater income tax would hit the upper class greatly and would be a unpopular move in terms of votes. One example it considers is a social insurance fund. This however would "increase business costs - therefore leading to possible unemployment", which would not be welcomed. Another option considered was to privatise the system but this could ulitmately end up in the lower class being left stranded with no way of paying medical bills. Should there be more surgeons in our hospitals? Should there be more GPs at the Health Centre? In these cases both the 'employed' and the nation would benefit however would it be the best way to spend the money? The article shows that there is no definite way to please everyone whilst attempting to better the health service.

2)The opportunity cost of a decison is "the cost of something in terms of an opportunity forgone" - in other words, the most you could have gained in wealth, resources etc. from taking a different option. This is important in this article as it discusses how NHS spending has risen to account for 9.4% of national income. This is a considerably large amount and it seems clear that Labour in 2001 saw the NHS as a priority. However, would this money be better spent in other areas such as the education system? It would be very hard to place an exact figure on the opportunity costs that investing into the NHS as the benefits of spending in other areas could not be measured. The money could have been used to improve prisons, strengthen the army or to help the transport system - these were possible alternatives however it seems clear that the Labour government viewed the NHS to need extra funding and therefore invested in that area.

3)The text explains that there are alterntives to the National Health Service. We are told about Social Insurance funds. This would involve people paying money into schemes from their wages and the scheme would provide the best use of this money health-wise. Another alternative discussed is by making people take out private health insurance. However, both these options have their faults and it would appear the best economic option at the moment to be the NHS.