Remove the blinkers and charge for using the NHS

It is not such a shocking idea really. In fact, until recently, most of us in Scotland were happy to accept the principle of charges. When you went to collect your medicine from the chemist, if you could afford to pay for it, you did. If you couldn't afford to pay, you got the medicine for free. Quite right. That's how it should be.

And then the Scottish Government introduced free prescriptions and suddenly everyone was getting medicine for nothing. But can that really be fair when it is based on the upside-down idea that everyone, including the poor, should subsidise health care for the well-off? The idea has even infected other areas of Scottish life to the point where the over-60s don't even pay their own bus fares. Not only is that policy expensive and unfair, it is open to abuse.

The same issues arise with the principle of universal free care in the NHS but that principle is kept alive by a sheer act of will – or blindness – by voters and governments, even Tory ones. The problem with that is that the NHS is costing more and more at a time of unprecedented pressure on the public finances and the situation is only going to get worse. Some people think the English Health Bill has nothing to do with us but if, as expected, a greater private element is introduced down south and less public money is spent, the Barnett formula means there will be a knock-on effect for Scotland. In other words, there's going to be less money for the Scottish NHS.

You might think the answer is to increase taxes, but this would only make the distorted reality of the NHS worse. The NHS is a market like any other and markets work best when the person who receives a service pays for it. What we've done with the NHS is warp this reality by paying for it all by taxes and making it free at the point of delivery which means no-one really knows, or cares, what things cost. Do you know how much it costs for you to visit the doctor? I don't. NHS managers, doctors and nurses are also subject to this twisted reality – they know their budget is ring-fenced, so where's the pressure to be efficient, to avoid waste? The money's going to keep on coming, so why worry?

User charges would be the solution to this problem, not least because they would be a more effective way to raise the money the NHS needs. Exactly how much the charges might raise would depend on the type of charge – and the cost of collecting it – but David Bell, professor of economics at Stirling University, has estimated that charges along the same lines as those levied in Sweden – yes, Sweden, that welfare-state utopia which charges people for health care – would raise £300million a year for the Scottish NHS. In other words, extra money would be injected into the NHS without increasing public spending.

The charges would be means-tested, of course, and would work in the following way. If you go to see your GP, there would be a charge for that consultation and then a charge for the medicine he or she prescribes. If you have to go into hospital, there would be a daily charge for that too, reflecting the cost of the food, bed, medicine and staffing and subject to a ceiling so patients who face a long stay because of a chronic condition do not have to pay.

This does not mean patients would face a charge up front; no one would have a chip-and-pin machine thrust into their hands as they lay on a gurney. Instead, they would be charged after the treatment had been completed on the basis of ability to pay. This is much fairer than the status quo which says that the less well-off should pay to treat the rich; under a user-charge system, the rich would be expected to pay for their own treatment and the less well-off would still get their treatment for free.

And there is another potential bonus to the system. Charges change behaviour and there is a lot of behaviour that needs fixed – in particular, a user charge would discourage patients who go along to their GP when they don't need to. We would have to be wary that we did not also discourage patients in genuine need of a consultation, but the retrospective means-test should prevent that happening.

There are other, much bigger potential benefits too. For a start, if we were raising money through charges, we could start to take some wire-cutters to that ring fence around the NHS budget. Why should it be immune at a time when we need to cut public spending – in fact, isn't it disgraceful that a government that needs to cut spending is not looking at a service that cost £12bn last year in Scotland, out of a total budget of £30bn? Perhaps if money was being raised through user charges, we could look at where some cuts, and improvements, could be made. We know there are poor levels of productivity for example, we know the quality of the service is variable and we know that doctors' pay has got out of hand. The problem is that the untouchability of the NHS that led Labour into the pay deal for doctors in the first place is now, as the Sunday Herald reported at the weekend, preventing the SNP from tackling doctors' bonuses, which last year amounted to £22million.

None of these issues is likely to be dealt with until we address the principle of free health care for everyone. Removing it would certainly face opposition – the proposed changes to child benefit demonstrate how defensive the better off feel about a free benefit – but the potential positives are great: more money for the NHS, a system focused more on the poor, but above all, a health service that is much more realistic about the future – a future in which we will have to pay more and more to look after a nation that is getting fatter, older and frailer.