iNews reported last month:
NHS England’s waiting list could rise to 14 million by autumn next year and continue increasing due to the backlog caused by the Covid pandemic, a report has warned.
Millions of patients were not able to receive care during the crisis, and if they returned to the NHS, the number of those joining the waiting list could overtake those being treated, the Institute for Fiscal Studies (IFS) said.
How did the NHS end up in this situation, with tens of millions of patients waiting for care? Like New Zealand, the NHS is a public health system. Under a public health system, health care is funded by the government (out of general taxation), and provided to patients at no cost (or costs might be shared with patients paying a low co-payment for some types of care).
However, a public health system doesn't overcome the fundamental scarcity of health care resources. In a private health system, the price of health care determines who does, and who does not, receive health care (those who are willing and able to pay the market price, often with the assistance of private health insurance, will receive the scarce health care). In a public health system, the price of health care is low (or zero), and so price does not ration the scarce health care resources. Instead, health care must be rationed some other way. In England (and New Zealand), the health care is rationed using a waiting list. If you want health care, you have to wait for your turn.
To illustrate this, consider the market for health care, as shown in the diagram below. If this was a private health system, the equilibrium price (P0) would prevail, and Q0 health care services would be delivered. However, in a public health system, the market price is zero. At the zero price, the quantity of health care services demanded is QD0, while the quantity of health care services supplied is QS0. There is not enough health care services to satisfy the demand, and this excess demand (or shortage) of health care services (which is equal to [QD0-QS0] is managed by a waiting list.
Now, consider how the coronavirus pandemic changed things in England. This is illustrated in the diagram below. Due to people getting COVID-19, the demand for health care increased from D0 to D1. At the same time, the supply of health care decreased from S0 to S1 (that's what happens when health care providers get sick as well!). With the price of health care stuck at zero, the quantity of health care demanded increased to QD1. The supply of health care decreased to QS1. So, the excess demand for health care increased from [QD0-QS0] to [QD1-QS1]. The waiting list increased.
How can the NHS avoid this situation? The iNews article says:
Estimating the number of returning patients and the capacity of the NHS, the IFS said the most optimistic scenario would see 80 per cent of ‘missing’ patients return to the NHS.
This would increase waiting times to nine million next year, which would not drop back to pre-pandemic levels until 2025.
To achieve this, the NHS will have to increase its capacity by five per cent over the next two years, compared to 2019, and then by 10 per cent from 2023.
Increasing the supply of health care services (by increasing the capacity of the health system) would shift the supply of health care back to the right. However, notice that the waiting list would not be eliminated, only reduced. Health care resources remain scarce. Alternatively (and not noted in the article), vaccinations reducing the demand for health care would also reduce the waiting list. The key point here is that, if changes in the demand for (and supply of) health care can't affect the price (as is the case in a public health system), then they will be reflected in the length of the waiting list.
[HT: Marginal Revolution]
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