ANALYSIS
NHS spend per capita of around £3236. 11 This average conceals a skewed distribution across the population, however, with spending on older and poorer groups being much higher than that on younger and better off groups, for example. Pooling the financial risk of ill health through general taxation coupled with universal access helps to mitigate such inequities. How much do we want to spend? Over the lifetime of the NHS, spending on the NHS has grown on average at around 3.4% per year in real terms. Over the same period, UK GDP has grown on average by 2.1% per year. This has meant the NHS taking a larger share of GDP over time — from 3.2% in 1950-51 to around 9.3% in 2022-23. Three main factors drive the pressure to spend more on the NHS: population changes, income effects, and other cost pressures. 12 13
Historically, at least for the UK and many other countries, increases in population size and growing numbers of older people have not been a significant driver of spending. Rather, key factors have been increases in national income and a desire to spend a higher proportion of these increases on healthcare, plus changes and advances in medical technology. These, together with higher inflation and lower productivity in healthcare relative to the rest of the economy, have accounted for the bulk of overall spending pressures. Figure 2 sets out estimates of various spending pressures for some selected countries. “ Other cost pressures ” (for example, technology and inflation) account for a significant proportion of annual growth for several countries, especially the UK. The reasons for this are not clear, but as the effects of demography will vary across countries and time owing to differences in populations, so too will the structure and funding of countries ’ health systems and the propensity to adopt new technologies, for example, differ.
Fig 2 | Growth in public health spending per capita (1995 to 2009) 12
Although these basic drivers of the pressures to spend more can be identified and to an extent quantified, spending on the NHS is ultimately a choice. Whether the rate of historical growth was the “ correct ” or “ right ” rate is, for all practical purposes, unanswerable; it reflects trade-offs, choices, and opportunity costs of spending on health rather than other public services, as well as wider economic considerations. In economists ’ terms, in theory at least, an answer to the “ correct ”’ level or growth in funding exists: in essence, spend more up to the point at which the benefits from spending on health equal the next best way of spending society ’ s resources — education, say, or private spending. But calculating when this point is reached is not easy. As noted by Appleby and Harrison, 14 “ Determining the point at which allocative efficiency is maximised (and hence the optimal level of health care spending identified) would
require the Herculean task of quantifying (in commensurate units) all the total returns curves for all possible uses of the nation ’ sscarce resources across all levels of spending and then allocating resources (in effect setting budgets) for every possible type of spending in a way which maximised returns at every level of spending until all resources are consumed. This exercise would need to be undertaken continuously to accommodate technological changes. The fact that every individual would place different values on the returns from different types of spending adds an almost infinitely complicating twist to an already near-impossible task. ” Nevertheless, budgets have to be set, and attempts have been made to grapple with this task. One guide on how much to spend is what other countries spend. As figure 3 shows, the UK ranked 16th highest for per capita spending out of 38 OECD countries for the pre-covid year of 2019 and 17th in 2022. The extent to which such knowledge helps to inform how much we want to spend is debatable.
the bmj | BMJ 2024;384:e079341 | doi: 10.1136/bmj-2024-079341
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