The NHS Needs a New Model: Time for Insurance-Based Care

Introduction

The National Health Service is the closest thing Britain has to a national religion. Founded in 1948 on the principle of healthcare free at the point of use, it represents a social contract between the state and its citizens that few politicians dare to question.

But the NHS is in crisis. Waiting lists have reached record levels. A&E departments are overwhelmed. GP appointments are increasingly difficult to secure. Staff burnout is endemic. And the 10 Year Health Plan for England, published in July 2025, acknowledged that the system needs fundamental structural reform.

The question is no longer whether the NHS needs to change. It is how. And the answer may lie in a model that is commonplace across Europe but taboo in Britain: insurance-based healthcare.

The Current Model Is Failing

The NHS is funded almost entirely through general taxation. In theory, this means everyone contributes and everyone receives. In practice, it means the NHS competes for funding with every other government priority — defence, education, pensions, welfare — and consistently loses.

The Health Foundation has documented persistent underfunding relative to comparable European countries. The UK spends roughly 10% of GDP on health — below the OECD average and significantly below France, Germany, and the Netherlands, all of which deliver better outcomes.

The result is rationing by delay. The NHS does not charge you, but it makes you wait. And for many patients, the wait is now dangerous.

A New Model: Employer-Paid Insurance

Here is a proposal. It is not a dismantling of the NHS. It is an evolution.

The Core Idea

Replace general taxation funding with an employer-paid health insurance system. Every employer would be required to provide health insurance for their employees, funded through a mandatory contribution (similar to the existing National Insurance system, but ring-fenced for healthcare).

How It Would Work

1. Universal Basic Coverage

Every citizen receives a basic level of coverage — funded by a combination of employer insurance, self-employed contributions, and a state safety net for those not in work (retirees, disabled, unemployed). No one is left without care.

2. Employer Contributions

Employers pay insurance premiums for their staff, replacing the current system where employer National Insurance contributions are absorbed into general taxation. The key difference: the money goes directly to healthcare, not into the Treasury's general pot.

3. Subsidised Point-of-Care Payments

Patients pay a small, subsidised fee at the point of care — perhaps £10 for a GP visit, £15 for a prescription. These payments are reimbursed through a health insurance spending card linked to the employer's plan. The fee deters frivolous use without creating a barrier to genuine need.

This model is not unusual. France and Germany both use variations of social insurance with point-of-care co-payments, and both consistently outperform the NHS on quality metrics.

4. Competition and Quality Incentives

Here is where the model gets interesting. Hospitals and clinics would be funded based on outcomes, not just activity. Those that deliver better patient outcomes — faster recovery times, higher satisfaction scores, fewer readmissions — receive financial bonuses.

This creates competition. Not the destructive, profit-driven competition of American healthcare, but a managed competition where providers are incentivised to improve quality and efficiency because their revenue depends on it.

5. Patient Choice

Patients could choose their provider — GP, hospital, specialist — based on published quality data. Money follows the patient. Providers that attract more patients through better care receive more funding. Those that underperform lose patients and revenue.

Addressing the Concerns

"This is privatisation by stealth"

No. The system remains publicly regulated, universally accessible, and free at the point of use (with nominal co-payments reimbursed through insurance). What changes is the funding mechanism — from general taxation to ring-fenced insurance — and the incentive structure — from bureaucratic allocation to outcome-based competition.

"This will create a two-tier system"

It might — and that is something policy must guard against. The basic coverage tier must be genuinely comprehensive, and the regulator must ensure that providers do not cherry-pick profitable patients while neglecting complex cases. But two-tier healthcare already exists in the UK: those who can afford private care get faster treatment. This model would improve the base tier for everyone.

"Employers can't afford it"

Employer National Insurance already costs 15% of salary. This would replace, not add to, that contribution. Employers would pay into a health insurance fund instead of into general taxation. For many, the cost would be similar or lower.

Reform UK has proposed 20% tax relief on private health insurance as a transitional step, though critics argue this would disproportionately benefit higher earners. A mandatory employer-funded model avoids this problem by ensuring universal coverage.

Conclusion

The NHS needs more than incremental reform. It needs a new funding and incentive structure that delivers better outcomes, reduces waste, and gives patients genuine choice — while preserving universal access.

An insurance-based model, funded by employers, with outcome-based incentives and managed competition, offers exactly this. It is not American-style privatisation. It is European-style modernisation. And it is a conversation Britain can no longer afford to avoid.

What do you think? Would an insurance-based model improve the NHS, or would it undermine its founding principles? Should patients pay a small fee at the point of care? I'd love to hear your views in the comments.