The other approach , which would work best alongside charges , is to introduce a hypothecated health - care tax .

How to pay for the NHS Britain 's health service is underfunded . More money is part of the remedy - - but only part .

MOST people in Britain think that the National Health Service is on its knees . This view goes far to explain the Tories ' unpopularity: the NHS is the part of the welfare state that Britons care most about . Its perceived deterioration is something they find hard to forgive . The trouble is , when it comes to improving the health service , voters may will the end but they do not will the means .

People appear to share Labour 's scepticism about the government 's " internal market " in medical services: using competition to squeeze more out of given resources has not worked , they reckon . But they are also unwilling to see their taxes go up . Hence , Tony Blair has promised to stick to the Tories ' public - spending plans for at least two years . These plans entail an even tighter squeeze on cash for the NHS than the service has endured up to now . So what is to be done ?

The Tories persist in arguing that all is well: since 1979 spending on health has risen from 25 billion to 43 billion at today 's prices . True - - but beside the point . The demands on the NHS have risen , and will continue to rise , much faster than that . What makes health care unique among public services is the way an underlying trend of rising expectations interacts with new technology . As people get richer , they want better . Then , in health care , new technology tends to raise costs not lower them , because new treatments are usually dearer than old ones . On top of this , the more the NHS succeeds , the dearer it becomes: extend a life this year and you create a new patient to be treated in due course . People are anyway living longer ( thanks not only to the NHS but also to better diet and housing ) ; they need more health care as a result . All of which explains why , relative to demand , the resources devoted to health care in Britain have indeed been falling .

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A strategic choice will have to be made . One course is to let the NHS wither , delivering an ever narrower set of services to an ever poorer clientele , as increasing numbers take up private medical insurance . This process , despite Tory denials , is already well under way . The government announced this week plans to subsidise private insurance for long - term care of the elderly: another step in that direction . Labour objected , but none too loudly . If what Mr Blair says about taxes and spending is to be believed , his government may actually have to accelerate the trend towards privatised health care .

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Ultimately , that may be the only way to bridge the gap between ends and means . But such a course is worth resisting . The goal of high - quality health care for all regardless of income is a noble one , worth defending . And the full - blown private - insurance alternative , as adopted in the United States , is hardly inspiring . It resolves the political dilemma , to be sure , reconciling ends and means . But it leaves millions without adequate access to health care , and the majority who fare well under the system are obliged to pay an extraordinarily high cost for the privilege .

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The alternative is to revive the NHS . If there is to be any hope of this , the Tories ' management reforms will need to be consolidated and extended - - not reversed , as Labour says it intends . Then the task will be to bring demand and supply into line . More resources will be needed , but demand must be checked at the same time .

Two ideas commend themselves . One is to make greater use of charges . Patients could be asked to pay for such things as hospital rooms with greater privacy and better " hotel " facilities , and for a variety of non - essential procedures such as cosmetic surgery , treatment for varicose veins , fertility treatment and so forth . New technology , in most ways the enemy of health - care cost - control , could help: smart - card technology will soon make it possible to apply means - testing to such charges , and to vary the cost passed on to patients according to the price and urgency of the treatment .

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The other approach , which would work best alongside charges , is to introduce a hypothecated health - care tax . In the current year , the cost of the NHS will be equivalent to roughly 60% of the yield from income tax - - far more than most people suppose . Designate that sum as a health tax ( in effect , a parallel income tax , with future rates to be set independently ) and spend the proceeds solely on the NHS . In the past we have argued against earmarking taxes in this way: it raises a host of budgetary difficulties . But in health care there is a benefit that has come to seem overriding: it would force governments and voters to confront the question of ends and means . To plead that more must be spent on health care without specifying where the money is to come from would henceforth convince no one . A demand for more to be spent would be seen as a demand for higher taxes - - which is what , as a rule , it is .

Greater use of charges would reduce the demand for resources and increase their supply simultaneously . What would be the effect of a hypothecated health tax ? So confused are people about what they require of government in this area that it is difficult to say . Perhaps they would call for a big rise in taxes , given the assurance that the money would be spent on the NHS. Conceivably , they would call for a cut in health spending , once they saw on their paycheck how much it was already costing . In either case , they would begin to think hard about the demands that the NHS can reasonably be expected to meet . That would be new - - and long overdue .

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