National Insurance

This sub-group contains material relating to the Manchester Insurance Committee, who administered the Scheme, and the Manchester Medical (and Panel) Committee, who represented the panel doctors. There is also a substantial collection of cuttings relating mostly to the early years of National Insurance and a small number of other items relating to local implementation. This sub-group provides a range of research sources for the study of Health Insurance, and in particular its implementation in the Manchester area.

The two main drivers of the National Insurance Act of 1911 were the Royal Commission of 1909 into public health provision and the desire of Lloyd George to provide social insurance. Public health provision in England was haphazard and inadequate. There was a growing use of hospitals by patients who could afford to pay, uncoordinated development of hospital services, and inadequate provision - especially for tuberculosis (a major health hazard at the time). Some steps had been taken to address these problems; a number of local authorities had introduced compulsory notification of tuberculosis (Manchester was an early example in 1899) and Poor Law Hospitals were beginning to be coordinated with Local Authority provision. The major reforms suggested by the Royal Commission were prohibitively expensive and few immediate changes were made. Provident schemes provided care for subscribing workers and moved away from the charitable system. These were however limited in their size and success, and ultimately were not integrated into the Insurance Scheme. Friendly Societies, which provided medical and social benefits for their members were also popular with the better off workers, and played a major role in the Insurance Scheme. Lloyd George's visit to Germany to see their social insurance scheme had encouraged him to widen his concept of social insurance to include health. Compulsory insurance was seen as an ideal way to take a substantial section of the population out of the Poor Law without having to increase general taxation. Workers would pay into an insurance fund which was augmented by their employer and the government, and in return they would gain unemployment benefit, sickness benefit and medical care. This was the basic system, but the details of implementation were greatly influenced by three important lobby groups - friendly societies, insurance companies and the medical profession.

The British Medical Association, the representative of the doctors, had a number of concerns about the National Insurance Act. Doctors didn't want their general practice jeopardised; they wanted representation in administration and sufficient remuneration. The BMA passed six cardinal points as minimum conditions for the profession to take service under the Act:

• an income limit for those insured (so those who could afford private practice did not use service)
• free choice of doctor for patients,
• medical benefits administered by local health committees rather than friendly societies
• the method of payment of doctors to be decided locally
• payment should be adequate
• the profession should have adequate representation

The National Insurance Act was primarily concerned with reducing the pauperising effects of sickness rather than providing consistent coordinated care. Manual workers and all other workers with incomes under £160 a year were required to pay contributions of four pence a week to an approved society (such as friendly societies and insurance companies), their employers added three pence and the government two pence to the fund. The insured person became entitled to limited cash benefits, services of a general practitioner, pharmaceutical benefits and treatment for tuberculosis. The scheme was supervised by committees, who would establish a list, or 'panel', of doctors in the scheme, from which patients would have free choice; insurance practitioners were often known as 'panel doctors'. The scheme did not include the families of wage earners, disenfranchising the most high risk patients (the young, old, unemployed, and chronic sick). Insured people however gained reliable medical care free from the taint of the poor law and began to see medical care as a right rather than a privilege. General practitioners gained a regular source of income and some emancipation from the control of friendly societies.

The National Insurance Act also included a tuberculosis scheme, which was funded and managed partly through national insurance and partly through central government. Funding was available for new sanatoria and dispensaries, and workers would be awarded sanatorium benefit. In Manchester, sanatorium benefit was paid directly to the Local Authority for a revised tuberculosis scheme. This enabled the Council to adopt Hardman Street Clinic as its Tuberculosis Clinic and Manchester Corporation also added an extra £2,000 for benefit for affected families (who were not covered by National Insurance). Over half of tuberculosis beds were in voluntary hospitals, and this saw the beginning of municipalization of voluntary hospitals. However, the Insurance Act was not concerned with the role of hospitals. There were fears that voluntary hospitals would lose subscriptions, especially from employers, and want payments to take insurance patients. This would have put them under state control and instead, hospitals took patients on referral from insurance companies (and emergencies). Insured patients with minor ailments now went to their general practitioner rather than hospital out-patients. If they had a serious problem they would increasingly be referred to hospitals, as doctors, when paid per patient, had little motivation to treat complex problems. Hospitals became seen as places for specialist treatment, rather than places for the treatment of the poor.

There were two systems by which doctors were remunerated for treatment given under the Act, namely the capitation and attendance systems. Under section 15 of the National Insurance Act, the method of remuneration of doctors could be agreed with the local insurance committee. With the standard system, capitation, doctors were paid according to the numbers of patients on their list. Capitation led to a number of problems, including touting for patients and provision of certificates to malingerers. Under the attendance system, doctors were paid according to the treatment given to patients. At beginning of the century, the Manchester Medico-Ethical Association had drawn up a tariff of professional fees, which was widely accepted (see MMC/11/1/2). Doctors in south Lancashire had been central to opposition to the Act and many had bad experience with club practice. They elected to be paid under the attendance system, which became known as the Manchester System, and was used in Manchester, Salford and the Isle of Man. This system enabled patients to change their doctors, made the whole of the practitioners responsible for the care of the insured population, rather than individual doctors responsible for particular patients, and was seen as more equitable for doctors in densely populated areas with ill health, such as Manchester and Salford. However, the attendance system proved expensive. Inner city populations, especially working women, were less healthy than had been expected, and the attendance system may have compounded the problem by encouraging doctors to over attend. In an inquiry into the system in Manchester, launched in 1914, the Insurance Committee, friendly societies and chemists were generally in favour of the capitation system, but the Medical Committee strongly supported the attendance system. The attendance system had a number of advantages and excessive costs were also seen under the capitation system. The advent of War probably also affected the decision to stay with the attendance system until 1928 when Manchester and Salford changed to the capitation system. Manchester also suffered from much higher than average costs of prescriptions per patient, probably also due to ill-health of the population combined with a tendency of doctors to over-prescribe under the attendance system. The National Health Insurance scheme paved the way for the success of the National Health Service.

The sub-group has been arranged into four series: Insurance Committee, Manchester Medical (and Panel) Committee, Cuttings, Other items.

Most of the material has come to the collection from Dr Brockbank, a medical representative of the Manchester Insurance Committee, and Dr W.J. Rutherfurd, a member of the Manchester Medical (and Panel) Committee.

None

Minutes of Manchester Insurance Committee 1912-1948 (33 volumes) at Manchester Archives and Local Studies, GB127.M40. Comprises minutes of the following sub-committees: Insurance Committee 1912-1948; Finance and General Purposes Sub-committee 1912-1948; Medical Benefits Sub-committee 1912-1948; Sanatorium Sub-committee 1912-1921; Deposit Contributors' Sub-committee 1913-1921; Emergency and Staff Sub-committee 1917-1948; Allocation Sub-committee 928-1948; Prescriptions Committee 1916-1922.

• Bentley B Gilbert, The evolution of National Insurance in Great Britain: The origins of the welfare state, London, Michael Joseph, 1966.
• Steven Cherry, Medical services and the hospitals in Britain, 1860-1939, CUP 1996.
• F.N.L Poynter, The evolution of Hospitals in Britain, Pitman, London 1964.
• John V Pickstone, Medicine and industrial society: A history of hospital development in Manchester and its region, 1752-1946., Manchester University Press 1985.