Lesson for Obamacare? UK health service ‘in crisis’

The U.K.'s National Health Service (NHS), for decades the case-study in postwar universal healthcare for governments around the world, seems to be facing its biggest ever crisis of confidence.

Almost every area of U.K. state-provided treatment from cancer to the emergency room and midwifery is complaining of overcrowding and underfunding. With an aging and growing population increasing the burden on healthcare -- and a government which is trying to keep a lid on its spending -- the NHS appears to have an impossible task.

Matt Cardy | Getty Images

During his struggle to set up Medicare, U.S. President Barack Obama praised the NHS as "something that Brits take for granted – a health care system that ensures you don't go bankrupt when you get sick." At the time, Republicans, particularly members from the Tea Party, were quick to point out the NHS's perceived failings. They might be even quicker to leap on the most recent headlines.

Since the start of the year, concerns and controversy have reached fever-pitch. You can't open a newspaper in the U.K. without seeing a hair-raising headline: "Cancer patients lose life-extending drugs", "Put up drink prices to stop A&E crisis" and "Circle pulls plug on hospital deal and sparks storm over private firms in NHS."

"What the NHS represents is the biggest management change challenge that there is in all the OECD (Organization of Economic Co-operation and Development member) countries in the world," Paul Saper, ‎managing director at LCS International Consulting, the healthcare consultancy, told CNBC.

But what has really gone wrong with the NHS, and what can be done to fix its problems?

A matter of money?

Successive U.K. governments have raised spending on the NHS, and the current administration promised a new efficiency drive. There are concerns that the funding needed to keep the NHS going will endanger the current government's plans to have a budget surplus by 2018-9. Yet this does not appear to have made the U.K. population any happier with their free healthcare.

The amount spent on healthcare per person in England rose from £1,712 in 2008/09 to £1,912 in 2012/13, but over the same period, written complaints about the service offered by the NHS rose by 17.6 percent.

This may reflect a population who demand more from their health service than previously, more than an actual decline in provision.

The current government came in pledging to cut down the labyrinthine layers of management in the organization, to focus on frontline staff. Yet there are still complaints about NHS managers, who may not have medical experience. Plus there also appears to an increasing reliance on more expensive "locum" staff to plug staffing gaps.

"Management just seem to want to make it more difficult to do our jobs," one London-based doctor told CNBC, speaking on conditions of anonymity. "Meanwhile, getting anything changed takes forever. When you see how much locums are paid, it almost seems easier to do that than train properly with the NHS."

No room at the inn

With the social care budget being cut, it is more difficult for hospitals to move patients on from the wards to care homes or managed care in their own homes.

There is also a sense that the U.K. population as a whole takes free healthcare as a right, and some may be abusing that right by, for example, showing up at the ER with non-serious conditions, something which has particularly exercised doctors this winter.

"We are going to see a lot of new models of care develop," Cathy Corrie, a senior researcher at U.K. think tank Reform, which has proposed a number of changes to the NHS, told CNBC.

Yet Reform's proposals to charge a small fee for appointments, or an idea from Norman Warner, the former Minister of State for Health, to charge an annual membership fee, coupled with a yearly health review, have not been backed by any major political party. Neither of the leading candidates to be Prime Minister following May's election seems to want their legacy to be the end of "free" healthcare.

Private-sector solution?

One of the several solutions to the NHS' problems was to increase competition between public and private providers of healthcare. However, one attempt to change the funding model, by getting a private company to run a hospital, has been a high-profile failure.

Circle, founded by ex-Goldman Sachs banker Ali Parsa, attracted a number of big name investors, including Odey European, Lansdowne, Balderton and BlueCrest. Its share price is now less than a third of its 2011 listing price of 163p, after it stepped down last week from a contract to run the struggling Hinchingbrooke hospital.

"Privatizing Hinchingbrooke was guaranteed to be a failure. It was a dangerous government experiment which should now raise alarm bells for any other firms who think that running hospitals is an easy route to profit," Dave Prentis, general secretary at UNISON, a union representing U.K. health workers, said.

"The NHS is simply not shaped for competition. It is currently struggling with its biggest crisis in a decade and despite this, staff are working day in and day out caring for the most vulnerable."

Yet those in favor of greater private involvement in the NHS are standing their ground. "They (Circle) had no track record of running hospitals. This was always a crazy contract on both sides," Saper argued.

"This shouldn't be taken to mean that the private sector can't have a role in the NHS," Corrie said.

No real end in sight

One thing which is for certain is that the NHS will continue to be squeezed, whoever is in power.

"We are in an era where there isn't any spare cash to spend, without cuts to other departments. That isn't a long-term solution to what is a long-term problem," Corrie said.

- By CNBC's Catherine Boyle