Chancellor Gordon Brown is pumping another billion pounds into the NHS and signalling that tax increases are on the way, but do we need to change the way we pay for our health service?

Britain's top health economist, Professor Alan Maynard, has a favourite joke about the NHS. "Tony Blair has promised to pull us up to the average European Union expenditure on health - but, by the time we do it, Poland and Hungary will have joined the EU and the average will be lower".

York University's professor of health studies also enjoys this anecdote about the German health care system. "I once said to a German academic 'You have the most efficient economy in the world but you have the most inefficient health system'. He put his arm around me and said, 'Alan, we can afford it!'."

Joking apart, Britain spends far less per head of population on health compared to most other Western European countries and, arguably, gets the health service it deserves. But, before we rush to embrace the kind of insurance-based health system which exists in Germany and France, we should consider the achievements of the NHS, says Prof Maynard.

Tuesday's pre-budget statement by Chancellor Gordon Brown - and his endorsement of a Treasury study which backed taxation as the most efficient way to pay for health - suggests that taxes will rise next year to fund the expansion of the NHS. But the Conservatives argue that we should be more imaginative about how we fund the health service, looking to Europe for alternative models. They have doubts whether simply pouring more taxpayers' money into the existing system will produce the goods. Worryingly, a recent report from City research group Tenon suggested that the extra cash already ploughed into the NHS by the Labour Government has had "limited" effects.

But Prof Maynard is bullish about the NHS. He says: "Considering the modest amount we spend on health, the first thing the British public should do is recognise how bloody good it is." While there are enormous variations in the quality of care around the country and "unacceptable" delays in gaining access to health services, the success of the NHS in delivering a lot of health care for relatively little investment was undeniable, he claims.

Prof Maynard is scathing about the "bureaucratic and wasteful" health systems in Germany and France, but admires the high quality of services and the first-class surroundings where health is delivered in those countries, compared to the sometimes "grotty" UK equivalent.

"In Germany, you pay a lot in insurance premiums and it is a very luxurious system. It means no waiting times because the doctors are waiting, knives poised, beds ready," he says. The French system is similar to the German but even more bureaucratic. "If you consume health care they make you pay and then you get a refund from your sickness fund."

Prof Maynard says he is indifferent about how the NHS is funded, although acknowledging the relative efficiency of a tax-funded system. "It doesn't really matter how you finance a health service because all the money comes from taking resources from households, whether it is insurance premiums or taxes."

He claims the media and politicians are obsessed with how we fund the NHS when the crucial issue is injecting more resources. "The big problem is one of capacity: we haven't got enough nurses, doctors and beds. If the NHS went private tomorrow you could not invent doctors any faster than under the present system."

But the professor is worried about reforms being pursued by Health Secretary Alan Milburn. "We have got to stop restructuring every three or four years, we need to focus on how do we improve the quality of patient care and how do we improve access to it."

That echoes the comments of North-East doctors, who welcomed the extra billion but feared that much of the money will not reach front-line services. Prof Maynard says there are two simple things we could do to improve efficiency: allow GPs to refer patients directly to hospital for in-patient surgery, and make the first point of contact in primary care well-trained nurse practitioners.

Professor Royston Stephens, who heads Northumbria University's faculty of health, social work and education, says: "For value for money, the NHS can't be beaten. If you look at the big health outcomes, like lifespan and infant mortality, we do very well for what we put in. We are not near the top but, given what we spend, it is an excellent outcome."

But there is a downside. "What it doesn't have is good, individual clinical outcomes and there is a distinct lack of patient choice," he says. Recent statements by Alan Milburn on his willingness to use the private sector to treat NHS patients suggests to Prof Stephens that the "1940s, Stalinist model" of health care is beginning to crack.

So what is the German system like? Andreas Horn lives in Darlington's German twin town, Mulheim, a community of 174,000 people served by two large hospitals. Like increasing numbers of Germans, he has decided to take out private health insurance, because the large sickness insurance funds which cover the majority of the population are beginning to make contributors second-class citizens when it comes to health care.

"Up to now the system has worked well but it is beginning to fall apart," says Andreas. Increasing unemployment - approaching four million - is putting a huge strain on the sickness funds set up more than 100 years ago.

"When I go to the doctor I have to pay, but I sent my bill to my private insurance company and they pay it. Most people go to the doctor and they send the bill to the sickness fund. The problem now is that some doctors have said they will only take people with private insurance because they are paid a bit more for treating them. There are also more and more restrictions on what you can get through the sickness funds."

In Darlington's French twin-town, Amiens, which has a large regional hospital and two private clinics to serve its population of 180,000, Michelle Sagez believes most people are happy with the system and do not want to change. "We have a public system and a private system and we can move from one to the other. Normally, people have a card and the treatment is free, but I prefer to pay when we see the doctor and afterwards I claim it back from my insurance company," says Michelle, who pays a monthly premium, matched by her employer.

Ironically, the French government is considering a British-style tax-based approach to funding health care. But Michelle is sceptical. "We have choice, if we do not agree with a doctor you just choose another one."

Ultimately, the result of the next election will confirm whether the British public are prepared to pay more taxes for a better health service.