[PDF] A piggy bank for healthcare : why the health system needs old-age reserve funds

Publisher:
Institute of Economic Affairs (IEA)
Publication date:
01 May 2017

Abstract

The basic problem is that the NHS (like most healthcare systems) is financed on a pay-as-you-go basis: all current expenditure is paid out of current revenue; the system never builds up any reserves. The alternative would be a prefunded system that builds up old-age reserves (comparable to pension funds) for people of working age, and then draws upon them when people retire. In such a system, population ageing would be much less of a problem, because as the number of elderly people grows, the reserves accumulated in the old-age funds would grow alongside.

IEA Discussion Paper No.83