The NHS is one of our most cherished institutions. The Commonwealth Fund, a private American foundation that supports independent research on health, judged it to be overall the best, and easily the best value for money, of any national system of healthcare. Yet today it faces an existential crisis.

Hospitals are running up huge deficits and their financial situation is deteriorating rapidly. A shortage of doctors has forced over a hundred GP surgeries to apply for the right to stop accepting patients. Morale among junior doctors is so low that they not only went on strike but many now feel they have to emigrate. As Polly Toynbee demonstrated in Tuesday’s Guardian, the NHS will need a large injection of new cash to make up for the gross neglect of mental health.

Lack of cash lies at the heart of the NHS crisis, and the fundamental reason is that its costs rise much faster than the growth of GDP (or national income). We live longer, and the older we get the more medical care we need. New expensive drugs and surgical procedures cure diseases that were incurable before.

And, making things worse, these extra costs have to be met at a time when George Osborne’s declared strategy is to shrink the state and eliminate the national deficit by 2020. Social services, which play an essential role in providing healthcare, have already suffered grievously from cuts and are facing more. In fact instead of increasing as a proportion of GDP, the share of expenditure on health and social care is actually declining. According to the Office for Budget Responsibility, it will decline from 6.1% in 2014/2025 to 5.4% in 2020/2021, as revealed by the Treasury’s own autumn spending review.

What can we do to save the NHS? Either spending will have to be drastically increased, or costs drastically cut, or there will have to be further reorganisation, perhaps a mixture of all three.

Norman Lamb MP, the former Liberal Democrat health minister, recently introduced a 10-minute rule motion in the House of Commons to set up an independent commission on the future of health and social care – a kind of modern Beveridge commission. He is supported by two former secretaries of state for health – the Conservative Stephen Dorrell and Labour’s Alan Milburn, and by MPs from all three parties.

Much as the commission is urgently needed, it will, unfortunately, take time to report. However, one crucially important part of Lamb’s proposal could be implemented by next year. It is to convert national insurance contributions (NICs) into a separate, progressive, hypothecated tax, earmarked solely for funding both health and social care, which cannot be treated separately. Unblocking the misuse of hospital beds, for instance, cannot be achieved without a joint approach.

NICs no longer serve a useful purpose. Originally they were introduced to pay for the cost of health and pensions. Instead, they have become part of the government’s general revenue, but they still survive as a separate, inefficient, retrogressive tax on jobs, which increases both business costs and unemployment. Whatever happens, they should be scrapped.

However, the Treasury is strongly opposed to hypothecated taxes. General taxation, it is argued, is more efficient because it involves fewer transaction costs and is collected from the largest possible base.

It is also claimed that hypothecation ties the Treasury’s hands because it hampers the most efficient allocation of public funds to where they are most needed or give best value for money. It has also been suggested that a hypothecated health tax would alter behaviour: “We have paid for this service. We must get everything out of it we can.”

Some of these arguments are not without merit. But in my view they are vastly outweighed by the special regard people have for the NHS. We are more willing, or much less unwilling, to pay for what we greatly value. Many people resent paying taxes because they don’t like government policy, or some particular policies (spending on Trident, for instance, or what are perceived as excessive welfare benefits or bureaucratic waste). But a tax for a popular public service overcomes this objection. The most effective slogan of any recent Liberal Democrat election campaign was “An extra penny on income tax for education”. The TV licence fee is a hypothecated tax. A poll commissioned by the BBC found that the licence fee was easily the least unpopular way of paying for the BBC.

The great American judge Oliver Wendell Holmes once said: “Taxes are the price we pay for a civilised society.” A special health and social care tax could not be a better example.