IPPR: Switching NHS to insurance model would not improve performance

Switching the NHS to a European-style social health insurance model would not improve performance across key measures and could prove costly and disruptive, according to a major new report from the Institute for Public Policy Research (IPPR).

The analysis examined health systems in 22 high‑income countries and found that differences in outcomes vary more within funding models than between them, challenging claims that insurance-based systems in countries such as France or Germany are inherently superior.

While no funding model consistently outperforms others, the report highlights advantages associated with tax‑funded systems. IPPR says these differences matter for affordability and fairness, particularly for households on lower incomes. The think tank warns that a move from a tax‑funded system to an insurance model could cost billions of pounds, take decades to implement and introduce complexity and instability during the transition.

It cautions that major structural reform could further strain the health service rather than address existing performance issues. Instead, the report argues that the NHS’s weaker performance compared with some international peers is partly driven by chronic underinvestment.

Although health spending has reached record levels, much of the recent growth has been absorbed, limiting investment in the health service’s physical and technological capacity. Capital spending in the UK stood at 0.358% of GDP in 2023, down from 0.395% in 2010—around half the average in comparable high‑income countries.

IPPR says this sustained underinvestment has constrained the NHS’s ability to increase capacity, modernise infrastructure and improve productivity. “There is no structural silver bullet for the NHS,” said Sebastian Rees, Head of Health at IPPR. “The idea that simply switching to a European-style insurance model would fix its problems is a pointless distraction and not supported by the evidence.

The NHS’s challenges are real – but they are the result of a decade of chronic underinvestment and choices on how money is spent, not the funding model itself.

Policymakers should focus on what actually works: investing in infrastructure, strengthening primary care, and tackling the drivers of poor health.” The NHS Alliance responded to the report, with its Director of Policy, Improvement and Leadership, Dr Layla McCay, noting that the British Social Attitudes Survey shows continuing strong public support for the NHS to be primarily funded through taxes.

She said the service is already undergoing far‑reaching reforms in how and where care is delivered and its role in keeping people well, alongside major changes in how services are led, organised and held accountable, while striving to meet tough performance challenges amid a relentless rise in demand.

The report concludes that promoting insurance-based systems as a solution to the NHS’s challenges is not supported by evidence. It warns that pursuing funding‑model reform could delay the practical investment and service changes needed to restore performance and improve patient care.