THIS DOCUMENT I S THE PROPERTY OP HIS BRITANNIC MAJESTY'S GOVERNMENT)
S E C R E T
C P. ( 5 0 )
COPY NO.
56
.50TH MARCH,
1950
CABINET
NATIONAL HEALTH SERVICE
(ENGLAND AND WALES)"
Memorandum b y t h e
Minister
of
Health.
The C h a n c e l l o r of t h e E x c h e q u e r , i n O . P . ( 5 0 ) 5 3 ,
p r o p o s e s an a n n o u n c e m e n t i n t h e b u d g e t s p e e c h , a n d t h e i n t r o ­
c l u c t i o n of l e g i s l a t i o n , t o t h e e f f e c t t h a t some £1+2 m i l l i o n s
i n i t i a l l y - a n d l a r g e r sums l a t e r - w i l l i n f u t u r e b e
r e c o v e r e d d i r e c t l y from p a t i e n t s u s i n g t h e N a t i o n a l H e a l t h
S e r v i c e , i n t h e form of c h a r g e s f o r i t s u s e .
2*
I a g r e e w i t h h i m t h a t we a r e b o u n d t o be f a c e d w i t h
f u t u r e d e m a n d s f o r e x t e n s i o n s and d e v e l o p m e n t s i n t h e S e r v i c e ,
and I c e r t a i n l y a g r e e t h a t i t would be p o l i t i c a l l y u n r e a l i s t i c
t o t h i n k t h a t a l l such demands can be u n i f o r m l y r e f u s e d .
But
I t h i n k i t w o u l d be e v e n more p o l i t i c a l l y u n r e a l i s t i c , i n t h e
p r e s e n t P a r l i a m e n t i n p a r t i c u l a r , t o make' t h e p r o p o s e d a n n o u n c e ­
ment.
3.
A l s o , I do n o t t h i n k we n e e d a s s u m e t h a t a l l e x t e n ­
s i o n s a n d d e v e l o p m e n t s of t h e S e r v i c e m u s t n e c e s s a r i l y i n v o l v e
i n c r e a s e s in maintenance c o s t s .
Some, a t a n y r a t e , m i g h t w e l l
be of a k i n d t o i m p r o v e f u t u r e e c o n o m i c r u n n i n g .
For others,
wo s h a l l h a v e t o e x a m i n e t h e n e e d f o r t h e m a g a i n s t t h e g e n e r a l
n a t i o n a l s i t u a t i o n and t h e p a r a l l e l n e e d s i n o t h e r f i e l d s , and
w h e r e t h e y c l e a r l y m u s t go on we s h a l l h a v e t o c o n c e n t r a t e on
o f f - s e t t i n g t h e i r cost by t i g h t e r a d m i n i s t r a t i o n and, wherever
p o s s i b l e , b y s a v i n g s i n o t h e r p a r t s of t h e S e r v i c e .
In t h i s
r e g a r d , we m u s t k e e p c l e a r l y i n o u r m i n d s t h a t t h e p r e s e n t
h o s p i t a l s e r v i c e i s p r e j u d i c e d , as compared w i t h i t s p r e d e ­
c e s s o r s e r v i c e s u n d e r l o c a l a u t h o r i t i e s or v o l u n t a r y o r g a n i s a ­
t i o n s , by h a v i n g a l w a y s t o i n c l u d e t h e a n n u a l c o s t of c a p i t a l
w o r k s " a b o v e t h e l i n e " a n d bj, n o t b e i n g a b l e t o f i n a n c e t h e m b y
loan.
I t h a s , i n my v i e w , p r o d u c e d , a m i s l e a d i n g p i c t u r e t o
l o a d t h e f u l l w e i g h t of t h i s on t h e o r d i n a r y h o s p i t a l e s t i m a t e s ,
a t l e a s t i n t h e s e i n i t i a l y e a r s of t h e new s e r v i c e .
kI am, a s t h e C h a n c e l l o r s a y s , c o n s i d e r i n g w i t h t h e
h o s p i t a l a u t h o r i t i e s t h e methods by which c l o s e r c e n t r a l c o n t r o l
c a n i n f u t u r e b e e x e r c i s e d i n t h e i r p a r t of t h e s e r v i c e , a n d I
have a l s o iinder r e v i e w c e r t a i n o t h e r p o s s i b l e economies i n t h e
health services generally.
I h o p e t o b e r e p o r t i n g t o my
c o l l e a g u e s on a l l t h i s v e r y s o o n , a n d i n t i m e f o r s o m e t h i n g t o
b e i n c l u d e d on t h e s u b j e c t i n t h e b u d g e t s p e e c h .
B u t , mean­
w h i l e , I suggest i t would b e , t o say the very l e a s t ,
tactically
u n w i s e t o commit t h e Government t o s u c h a d r a s t i c and u n p o p u l a r
a l t e r a t i o n i n t h e w h o l e s t r u c t u r e of t h e H e a l t h S e r v i c e a s t h e
p r o p o s e d r e c o v e r y of c h a r g e s w o u l d i n v o l v e .
5.
N o r do I b e l i e v e t h a t t h e e c o n o m i c y i e l d of t h e v a r i o u s
k i n d s of c h a r g e s w h i c h m i g h t b e i m p o s e d w o u l d b e l i k e l y t o b e a s
s u b s t a n t i a l , o r a s s i m p l y e f f e c t e d , a s may a t f i r s t s i g h t a p p e a r .
We h a d a g o o d e x a m p l e o f t h a t , a s s o o n a s t h e s h i l l i n g c h a r g e on
p r e s c r i p t i o n s was c l o s e l y i n v e s t i g a t e d .
T h e r e would be s i m i l a r ,
or o t h e r , d i f f i c u l t i e s in' o t h e r f i e l d s .
6.
I n t h e h o s p i t a l s , f o r e x a m p l e , , i f we t r i e d t o r e c o v e r
a m a i n t e n a n c e o r " h o t e l " c h a r g e f r o m p a t i e n t s f o r t h e i r k e e p , we
s h o u l d a t o n c e b e c h a r g i n g some p e o p l e who w o u l d n o t h a v e h a d
t o p a y , i n some of t h e h o s p i t a l s , e v e n i n t h e d a y s b e f o r e t h e
National Health Service s t a r t e d .
A l s o we s h o u l d i m m e d i a t e l y
r u n i n t o c o l l i s i o n w i t h , t h e p r e s e n t p r a c t i c e o f t h e M i n i s t e r of
N a t i o n a l I n s u r a n c e of w i t h h o l d i n g p a r t of c a s h b e n e f i t - e. g. o f
s i c k n e s s b e n e f i t o r p e n s i o n - f r o m r e c i p i e n t s who a r e i n
hospital.
I f t h e r e c i p i e n t was a l r e a d y b e i n g c h a r g e d b y t h e
h o s p i t a l , a n y r e d u c t i o n of h i s c a s h b e n e f i t o r p e n s i o n w o u l d h a v e
t o s t o p or be a d j u s t e d ;
t h e r e s u l t , b r o a d l y , would be t h a t
a p a r t f r o m t h e s h o r t e r s t a y c a s e s t h e r e w o u l d b e a l o s s on t h e
N a t i o n a l I n s u r a n c e v o t e t o s e t o f f a g a i n s t a n y s a v i n g on t h e
Health Service-vote.
W i t h o u t a l l o w i n g f o r t h i s s e t - o f f , an
e a r l i e r r o u g h e s t i m a t e s h o w e d t h a t a c h a r g e of 1 0 / - a w e e k f o r
e v e r y i n - p a t i e n t m i g h t y i e l d some £ 1 0 m i l l i o n s a y e a r i n E n g l a n d
and Wales.
After allowing for the s e t - o f f , i t i s obvious t h a t
e v e n w i t h t h i s h o s p i t a l c h a r g e i m p o s e d u n i v e r s a l l y we s h o u l d
s t i l l h a v e t o l o o k e l s e w h e r e f o r s u b s t a n t i a l l y more t h a n £ 5 2
m i l l i o n s i n o t h e r c h a r g e s a t t h e o u t s e t , and more l a t e r .
7L o o k i n g e l s e w h e r e w o u l d mean l o o k i n g a t , s a y , t h e c h e m i s t s ' , d e n t i s t s ' and o p t i c i a n s ' s e r v i c e s .
In E n g l a n d and Wales t h e f i g u r e s n e x t y e a r f o r t h e s e a r e a b o u t £26 m i l l i o n s f o r
t h e c h e m i s t s , £39'2r m i l l i o n s f o r t h e d e n t i s t s a n d £2h4" m i l l i o n s f o r t h e e y e s e r v i c e , a t o t a l of some £ 9 0 m i l l i o n s , ,
We s h o u l d b e l o o k i n g , i n f a c t , a t t h e p o s s i b i l i t y of r e c o v e r i n g a b o u t a t h i r d of t h e i r t o t a l c o s t i n d i r e c t c h a r g e s t o t h e p a t i e n t s . S.
T h a t i s t h e b r o a d k i n d of s i t u a t i o n we s h o u l d b e
f a c i n g on t h e p r o p o s e d a n n o u n c e m e n t .
B u t , as i m p o r t a n t as a u y ­
t h i n g i n i t , we s h o u l d h a v e a l s o t o f a c e a n e w c o n s e q u e n c e
a l t o g e t h e r i n some p r o v i s i o n f o r t h e money n e e d s of t h o s e who
could not pay the charges.
The N a t i o n a l A s s i s t a n c e B o a r d i s
p r e c l u d e d by s t a t u t e from a s s i s t i n g p e o p l e t o meet any " m e d i c a l ,
s u r g i c a l , o p t i c a l , a u r a l or d e n t a l " r e q u i r e m e n t s .
Either they'
w o u l d h a v e t o b e e n a b l e d t o d o s o ( a n d on t h e p r e s e n t g e n e r o u s
s c a l e s on w h i c h t h e y a s s e s s n e e d s , a good b i t of o u r y i e l d f r o m
c h a r g e s w o u l d b e o f f s e t ) o r some e l a b o r a t e new m a c h i n e r y w o u l d
h a v e t o b e d e v i s e d t o p i c k u p , a s s e s s and d e a l w i t h a l l " h a r d s h i p
c a s e s some o t h e r way.
E i t h e r way, a p a r t from t h e a d m i n i s t r a ­
t i v e c o m p l e x i t i e s a n d c o s t s of t h i s , we s h o u l d b e b a c k o n c e
a g a i n w i t h t h e means t e s t i n t h e H e a l t h S e r v i c e .
9.I have p u r p o s e l y n o t gone i n t o d e t a i l s i n t h i s p a p e r ,
b e c a u s e i t i s on t h e b a s i c - p r i n c i p l e r a i s e d by t h i s p r o p o s e d
a l t e r a t i o n of t h e H e a l t h S e r v i c e t h a t I t h i n k we m u s t f i r s t
decide.
The a l t e r a t i o n i s n o t o n l y i n i t s e l f u n d e s i r a b l e , i n
my v i e w , b u t i t w o u l d bo i n a n y c a s e a f u n d a m e n t a l p o l i t i c a l a n d
t a c t i c a l mistake.
I f my c o l l e a g u e s a g r e e w i t h me i n t h i s , I
s u g g e s t t h a t t h e n e x t s t e p i s f o r me t o p r e p a r e f o r o u r e a r l y
c o n s i d e r a t i o n an a s s e s s m e n t of w h a t s t e p s m i g h t now b e t a k e n t o
t i g h t e n c o n t r o l of h o s p i t a l a n d o t h e r e x p e n d i t u r e , a n d of w h a t
c o n s e q u e n c e s may f l o w f r o m t a k i n g t h e m , on t h e o r i g i n a l b a s i s of
t h e C h a n c e l l o r ' s a n n o u n c e m e n t d u r i n g t h e r e c e n t d e b a t e on t h e
Supplementary Estimates.
10.
T h i s "paper d e a l s o n l y w i t h E n g l a n d and Wales.
I
u n d e r s t a n d t h a t t h e S e c r e t a r y of S t a t e f o r S c o t l a n d i s s u b m i t t i n g
a s e p a r a t e p a p e r on t h e H e a l t h S e r v i c e i n S c o t l a n d .
A. B.
Ministry
of H e a l t h ,
30TH MAliCH,
S. W. 1 ,
1950.