Ed Miliband recently stated that there should be a link between NI contribution and service. I thought “Well done Ed, you've invented health insurance”.

The NHS is an outdated model and cannot provide quality services. Its approach towards healthcare on the demand side and a ‘provide everything’ mentality on the supply side, with no regard to cost (or some would say, quality), has created the perverse incentive for it to be abused, as has been reported recently in the mainstream media.

The biggest organizational problem with the NHS, however, is, once again, size. The NHS has a very centralized nature; it is effectively a command economy with an unlimited, taxpayer-funded, budget. Once again, we see a commonality between failure and large command and control structures.

For this reason the NHS will have to be broken up. Its time has passed. However, that does not mean that healthcare will become out of reach for everyone but the few, as the left will incorrectly state, and there are two reasons for this.

The first is the free market principle on which Smallism is based. Lots of smaller units create more competition than a few large ones, and competition is the key to advancement in science and technology.  Lots of smaller units also promote greater specialization and, thus, higher quality operation, maintaining competitive edge in a global marketplace. 

A distributed model such as this is common in engineering where small workshops specialize in very niche work, often involving a considerable amount of investment capital for much larger companies that create products or research from the work of these specialists.

The argument against this stance is that there needs to be large organizations to fund cutting edge research. However, in the modern age of commerce, competing companies have become very adept at collaborating on some projects and competing on others.  Many use similar delivery methodologies (PRINCE2, ITIL, ISO9000) enabling them to inter-operate smoothly.  In addition, academia is to be given a far more prominent role across innovation, which will again promote collaborative but competitive business.

Once again the principle of locality comes into play. If an area suffers a disproportionate amount of a particular illness then the insurance company and the people in the area have a greater incentive to find the cause and cure of that particular illness.  It makes no sense for an area with little demand for treatment in this area to fund and research it. 

Because of this, universities will collaborate with healthcare provider companies and insurance companies to find cures for illnesses. 

This change in funding method for research takes away any possible perverse incentive the large pharmaceutical corporations might have to find treatments, rather than cures. 

Research associations and funding would become one of the metrics used by wards when choosing a particular insurer, provider or even university, based on their residents’ majority preference.

Hospitals and wards have a broad range of options for transition. 

A union of wards may decide to buy the hospital and take over the running of it themselves. Wards (or groups of wards) will provide a mandatory group health insurance premium in the annual bill that ensures services are paid for by people who are eligible to receive them and this further encourages members to become part of a community through property ownership.

As we discuss in 3.1 Raising Capital and Entrepreneurship for People should a healthcare professional want to 'go it alone' then their should be no barriers to entry as are currently enforced for the NHS by state regulation.  Furthermore, professionals are free to enter education to run their own courses as discussed in 2.7 Education.
This is not to say there won't be 'any' regulation, of course the surgeon will still have to be qualified and provide an environment to a relevant standard but in order to innovate and prevent abuses of power in monopolistic positions we must allow and encourage competition.