The health care systems of the capitalist democracies have been subjected to radical transformation during the 1990s.footnote* This transformation has been rooted in the perceived need to control the cost of health care to the state and business, given factors such as the increasing range of effective services, the growing number of elderly people and changes in patients’ expectations. A central component of the response has been the attempt to unleash market forces in this sector, in line with the ideological convictions of right-wing governments.

This article assesses the impact of the attempts to impose ‘internal markets’ alongside new procedures to ration health care—except for the wealthy. Emphasis is given to considering the British experience, where market forces had not been associated with publicly funded health care since 1948, although reference is also made to developments in the United States and elsewhere. Also analyzed are the health care policies of current centre-left administrations, including the impact of two years of New Labour on Britain’s National Health Service (nhs).

The National Health Service, fifty years old in 1998, has often been described as the envy of the world, or at least of the world’s Treasury ministers. Its coverage is universal and it is used by nearly all residents for general practice services and for emergency hospital care. The funding is overwhelmingly through taxation and the hospitals are owned by the state. Primary medical services are provided by General Practitioners (gps) who are independent contractors to the nhs, not salaried employees. Even the oecd has paid tribute to the uk’s publicly-owned, tax-financed health care system, describing the nhs as a ‘remarkably cost-effective institution’.footnote1

In 1995, the uk spent around 7 per cent of gdp on health care, coming twenty-second out of twenty-seven oecd countries.footnote2 In ascending order, Canada, Switzerland, France and Germany spent 10–11 per cent of gdp on health care while the usa spent over 14 per cent. The Thatcher–Major Conservative administrations from 1979 to 1997 did increase spending on the nhs, but this declined slowly as a percentage of gdp from 1981–82 until 1988–89, then rose dramatically until 1992–93, only to fall back thereafter. Health care in the uk is, however, not nearly as poor as these figures might initially suggest. For one thing, the costs of the nhs are comparatively low, due largely to low administrative costs, low salaries and wages to staff, no requirement to make returns to shareholders and, arguably, monopolistic purchasing powers. Also, when compared to us health care, the nhs has avoided the over-provision of services produced by competing hospitals wishing to attract custom by acquiring the latest equipment and by doctors whose remuneration has been linked to the number of procedures completed. In any case, popular support for the nhs is high. In 1992, 81 per cent of uk respondents said that the quality of health care people receive is good compared to 71 per cent for the European Union as a whole.footnote3 In 1998, 14 per cent of uk residents thought the nhs had so much wrong that it needed complete rebuilding. This compares with 23 per cent in Canada, 30 per cent in Australia, 32 per cent in New Zealand and 33 per cent in the United States.

Also, despite the low spending, health levels in the uk are reasonable. The average expectation of life for an English man was 74.3 years in 1995, compared to the European Union average of 74.0 years. Men in Sweden and Greece could expect to live over 75 years, while men in Finland, Denmark, Ireland and Poland all had life expectancies below 73 years. English women, however, fared less well compared to other Europeans, living an average 79.5 years—shorter than the eu average of 80.7 years.footnote4 Women in Luxembourg, Italy, Spain, Sweden and France could expect to live over 81 years, while women in Portugal, Denmark and Ireland averaged below 79 years. Britain has a very good record in relation to the number of people reaching their fiftieth birthday, matched by no other country except Sweden.footnote5 The World Health Organization reported in 1998 that on most criteria—infant mortality, life expectancy and death below the age of five—Britain did well but was bettered by the Scandinavian countries, Switzerland, Japan and the Netherlands.