The third way in health care reform: does the emperor have any clothes?

The Labour government elected in the UK in May 1997 has described its approach to the National Health Service (NHS) as a third way in health care reform. This article seeks to analyse the defining features of the third way. It argues that the government has adopted an approach which combines central direction and local autonomy, sanctions and incentives, and planning and competition. The third way therefore entails a cocktail of different approaches and is both electic and pragmatic. In pursuing this policy, the government is seeking to deal with dilemmas that are as old as the NHS itself and is seeking a synthesis between approaches that in the past have been seen as exclusive. It can be argued that the search for a synthesis is unlikely to succeed and the government will have to decide whether it is really committed to a centralised health service in which the main emphasis is on planning and sanctions or whether it is willing genuinely to devolve power to a local level with reliance on incentives and elements of competition. The alternative interpretation is that by making use of a variety of instruments the government is increasing its chances of delivering its objectives. From this perspective, to insist on absolute consistency is to fail to recognise the complexity of the steering mechanisms required in modern public services. In the international context, the third way may find favour as a rhetorical device among politicians seeking to carve out a distinctive niche in the political market place, but its specific characteristics are likely to vary between systems.