Private Health Insurance is Cheaper than the NHS

With a few quick calculations that you can repeat (or alter) yourself, I will show you the inefficiency of government welfare. You will soon see that private health insurance, which is generally of a higher standard, actually works out to be cheaper than the NHS.

For this little experiment, I’m just going to demonstrate the inefficiency of the government running its own healthcare system, versus just dividing up the plundered loot into equal parts for everyone and sending them a cheque.

Step 1: Research how much the UK government budgets to spend on Health Care in 2013.

Answer: £126.2 billion. Or £126,200,000,000.

The administrative costs of this hypothetical redistributive system would be minimal to non-existent, as the sole criteria for payment would be age, proven by ID, and an automated banking system could simply be programmed to send out mass payments. Nonetheless, I will assign a 3% overhead for programming costs and investigations of fraud, thereby reducing the previous budgetary estimate to:


Step 2: Find out the population of UK residents aged 18-65. Why not older than 65? Because they’re already covered by the pension welfare category, which is even greater than the NHS spending. Why not under 18? Because they’re generally not employed and are the responsibility of the parents, which we’ll budget for later.

Note that I am not counting just the number of taxpaying adults. This number will include ALL people aged 18-65, regardless of whether they pay taxes.

Answer: For 2013, estimated at 39,972,100. I’ll be generous and round that up to:


Step 3: Divide the government’s health care budget by the number of people aged 18-65, and come up with an average monetary sum that each one of them could simply have transfered as a cheque, rather than running an enormous government bureaucracy. Notice that I am ignoring any additional funds outside of the government’s bureaucracy that people are already spending on health care.


per adult.

(On an unrelated note – the last time I performed this calculation was a few years ago, and the number was lower. Perhaps I calculated differently. Or else the per capita healthcare budget has risen disproportionately. Or else currency devaluation has been quite bad.)

Step 4: Figure out average private health insurance cost. This is more difficult than the above. However, from some quick research online, and from personal experience looking at health insurance costs for differently aged people, including those past retirement age, the average health insurance for a 40 year old person is probably going to be around £1,000 per year.

Answer: However, I’m going to increase that amount by 50%, to £1,500, just to cover all the bases. Older people will obviously have higher health insurance costs.


In other words, equally distributing the NHS budget to people aged 18-65 gives them over £3,000 per year to spend on medical care. After covering insurance for £1,500, they have easily enough money left over to pay for doctor’s visits, any medicine not covered by insurance, and even their children (averaging around 2 per family).

Older people may of course receive a larger share of the loot, and younger people a smaller share. Such a system would also be fairly easy to administrate, as it would be age based.

My point, however, is not to advocate any sort of plunder and wealth (more accurately loot) redistribution. My point is to demonstrate the horrendous inefficiency of the NHS system. My personal experience is also telling. When living in the UK, I went to an NHS dentistry clinic (the closest to where I lived). I told them I needed to have a cavity filled. They told me the queue was 18 months.

In 18 months I’d need my tooth removed, not my cavity filled.

Other factors to take into account

Currently, private health insurance in the UK is a niche market. It caters mostly to wealthier people who can afford to pay for healthcare twice (once in taxes, and then again for the better private care). If the government’s bureaucracy wasn’t in the way, and if all healthcare was provided on a free-ish market, the result, as always is the result of increasing the availability of a good or service, would be the decline in its price.

The more people are insured, the cheaper insurance becomes because risks are diminished as the size of the insured population grows.

The more private hospitals and clinics there are that compete among each other for customers, the lower they will plunge their costs to stay competitive, while at the same time working very hard to improve the quality of the services provided.

You see, a government health worker will be paid regardless of whether his patients want to visit him or not. A worker on a competitive market however? Well, he might lose patients and even his job if he charges too much, or doesn’t provide good quality service.

Opening up an industry to competition and letting the customers withdraw funding when they’re dissatisfied always yields positive results.

So, were private health insurance to become mainstream, its price would plunge, and adults would have an even greater share of income left over.

Why does the NHS still exist, despite it being so easy to demonstrate how woefully inefficient it is?

Simple: The NHS has nothing to do with efficiency or taking care of people. It has everything to do with employing millions of people, most of who would be out of a job in a competitive market. It is also there because political projects like healthcare look good on TV, and politicians get to control and siphon off more taxpayer funds than they would if the plundered loot was simply equally distributed among the (alleged) intended beneficiaries.

Government bureaucracies take roughly two thirds of funds just in overheads. Now you can see who the real beneficiaries of the NHS are.

The NHS occupies the position of a Holy Cow in UK politics, shielding it from criticism by labeling anyone who opposes government provision of healthcare as someone who opposes all provision of healthcare. I bet that in the Soviet Union, people who said grocery stores shouldn’t be run by government were also laughed at in a similar manner – “But without government grocery stores, how will we get our food?”

Hindsight and the knowledge that food provided on a market is the only sure way to avoid mass starvation despite fluctuating environmental conditions and crop yields makes us feel high and mighty about the brainwashed people of the Soviet Union. Now apply that logic to healthcare.

And lastly, for anyone wondering about how insurance works on a much freer market than we have today, all I have to do is point at historical examples.

Of course, we all know the true reason those in government oppose the abolition of welfare systems. If the NHS system was abolished, where would all the bureaucrats go?

5 thoughts on “Private Health Insurance is Cheaper than the NHS”

  1. So far as I know private healthcare companies don’t provide A&E, ambulance or GP services. Doesn’t that change the figures a bit? I’ve recently been handled by the NHS and a private healthcare company and have been horrified at the difference in the quality of service. I was wondering how the private firms provide such a superior service so cheaply.

    1. Private health insurers most definitely cover A&E and ambulance services, and depending on your level of coverage will cover your GP too 🙂

      Oh and they do it because of competitive pressures. Since you can withdraw funding and go to another insurance company, they try to do their best on price and quality. The government however, being a coercive institution, does not allow you to withdraw funding, so they can screw up all day long and you still have to pay your taxes.

  2. Unfortunately £3000 doesn’t leave much money for surgeries. I’ve had two major surgeries in my life, for endometriosis and each would have cost much more than £3000 if I’d gone private. God bless the NHS!

    1. Libertarian Prepper

      I’m sorry about your surgeries… that sucks.

      £3000 is enough to afford private health insurance, which would more than cover your surgeries though.

    2. I’m sorry about your surgeries… that sucks. £3000 is enough to afford private health insurance, which would more than cover your surgeries. I don’t understand what you’re trying to say. I’m not at all arguing that you would only have £3000 in cash and no insurance at all.

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