Alastair’s Place

Software development, Cocoa, Objective-C, life. Stuff like that.

Amazing How Dumb Some People Are

It never fails to amaze me just how stupid some people are. The row about the NHS that was started in the United States has led to the BBC starting one of their “Have Your Say” threads (which always seem to be full of the most depressingly banal rubbish), but in this case I just can’t help commenting myself; the thing that annoys me the most is posts like this one:

Hows this for the NHS - My Dad had a heart attack 2 months ago, within 4 minutes the paramedics arrived with in 25 mins we were in A&E and within 2 hours he was on a specialist ward, life saved! - All this for Free, Oh forgot it must be Evil! - MURRRHAHAH!!

Since then I have been so impressed by the NHS and their staff, I have been applying for jobs with them, even on less salary than I currently am.

This is one Brit with pride in our NHS and its staff

john s, wigan

where the commenter appears to think that the NHS is free. It isn’t. It’s free at the point of use, but that just means that we pay for it through taxation.

And boy, do we pay for it. Government spending on health is listed in the 2009 Budget as £119bn, much of which is covered by the £98bn that was collected in National Insurance payments. National Insurance, for those who don’t know, is an over-complicated form of income tax that is paid by both employers and their employees so that the government can increase it by a notional 1% and actually get 2% extra (of your gross salary) in tax. It’s widely criticised (and rightly so) as being a tax on employment, and the excuse for its existence is that it’s there to pay for the NHS and the state pension scheme1.

But it’s very unlikely that the health figure on that graph includes payments related to debt interest on NHS-related projects, or the costs of PFI, all of which must come from somewhere (hint: that’s your pocket, stupid). See, for instance, this or this. Quite a chunk of the £28bn of debt interest payments shown in the Budget will relate to these kinds of things. There’s also a very suspicious £72bn of “Other” shown in the Budget…

Anyway, even if we believe the figure of £119bn (and I don’t know about you, but I’m skeptical that that number is the whole truth of it), the NHS costs us each around £2,000 per annum (or between US$3,000 and US$4,000 depending on exchange rates).

In reality, not all of the population pays National Insurance; it’s only paid by those in employment, and even then not everybody pays. The Office of National Statistics tells us that 28.93 million people are currently in employment, so the figure per working person is more like £4,000 per working person, per annum, assuming that everyone pays which I’ve already noted is not the case. (For the benefit of U.S. readers, that’s between US$6,000 and US$8,000 depending on exchange rate fluctuations!)

Of course, we can also look at this another way, which is to consider what “the man on the street” actually pays in National Insurance contributions, including his employer’s contribution (which, whether he knows it or not, comes out of what his employer is prepared to pay for him to work there).

According to average weekly earnings figures from the ONS, in May 2009, average weekly earnings were £440. Using the NI tables HMRC publishes, we can work out roughly2 how much someone on average weekly earnings pays £36.30 per week in Employees’ contributions, and a further £42.24 per week in Employers’ contributions that they usually don’t see (though it still effectively comes out of their pay, of course). That’s £78.54 per week, or a little over £300 per month. Or £4,000 per annum. Yes, that’s right, a person on average income has to pay over £300 per month for the NHS (that’s US$450 to US$600 depending on exchange rates).

So is the NHS free? No, it isn’t.

How does it compare with the U.S.? That’s a difficult question to answer sensibly and I’m not really going to attempt to do so here. But I note that here in the U.K. it’s quite likely that a family of four will have two parents out to work, especially if both are on average incomes (in which case the total NI contribution is around £8,000pa, or US$12,000-ish), while the National Coalition on Health Care estimated that in 2008, employers paid on average US$12,700 for a health plan for a family of four. Again, as an employee you may only be expected to front up US$3,400 of that, but the rest still comes out of what your employer is prepared to pay for employing you.

There are lots of other factors, of course. While the NHS theoretically provides dentistry and optometry and so on, in practice those are usually paid for separately. And I know in the U.S. there are excesses, limits and co-payments to worry about.

1 Astute readers may notice that I have omitted the cost of the state pension scheme from the following discussion. This is true, however:

  1. The state pension provision is very likely to be significantly curtailed by the time many people currently paying for it reach retirement age.
  2. Since the healthcare spending figure of £119bn is in any case higher than the NI figure of £98bn, we may as well consider that all of the NI money is spent on the NHS for the purposes of our discussion. That, in fact, more money from elsewhere is also spent on the NHS simply further inflates the costs for the individual, so you might regard the figures later on as conservative estimates.

2 Calculating the actual figures for National Insurance can be quite complicated, thanks to everything from bizarre and mathematically unjustifiable rounding through to the plethora of exceptions and special rules that apply in one case or another. Here I have simply multiplied the amounts between the thresholds by the percentage rates.