How does NHS spending compare with health spending internationally?

In 2000, current spending[1] on health care in the United Kingdom was 6.3 per cent of GDP, and the then Prime Minister Tony Blair committed his government to matching the average for health spending as a percentage of GDP in the 14 other countries of the European Union in 2000 (8.5 per cent) through increases in NHS spending.

Over the next few years spending on the NHS increased substantially, pushing total (public plus private) spending to 8.8 per cent of GDP by 2009. By then, however, the EU-14 spend (weighted for size of GDP and health spend, and minus the UK) had moved on to 10.1 per cent of GDP. Still, the gap between the UK and its European neighbours was closing.

Since then, however, the gap has started to widen (particularly against countries that weathered the global financial crisis better than the UK) and looks set to grow further. UK GDP is forecast to grow in real terms by around 15.2 per cent between 2014/15 and 2020/21. But on current plans[2], UK public spending on the NHS will grow by much less: 5.2 per cent. This is equivalent to around £7 billion in real terms – increasing from £135 billion in 2014/15 to £142 billion in 2020/21. As a proportion of GDP it will fall to 6.6 per cent compared to 7.3 per cent in 2014/15. But, if spending kept pace with growth in the economy, by 2020/21 the UK NHS would be spending around £158 billion at today's prices – £16 billion more than planned.

The growing gap between us and our European neighbours should give pause for thought. Tony Blair’s commitment was partly an appeal to ‘keeping up with the Schmidts and Lefebvres’. But it also emphasised that spending more on health care was affordable: if the Danes, Swedes, French and Germans can spend more on health care without apparently bankrupting the rest of their economy, why can’t we?

Comparing spending on health care between countries is not straightforward. We have to consider how to deal with differences in the source of funding: public or private (which will include out-of-pocket spending as well as insurance payments, often compulsory in countries with social insurance systems). Given differences in the way countries fund their health care it is usual to compare total spending (public plus private) expressed as a proportion of countries’ GDP.

On this basis, data from the OECD shows that in 2013 (the latest year for which figures have been published) the UK spent 8.5 per cent of its GDP on public and private health care. (This excludes capital spending equivalent to 0.3 per cent of GDP to make figures comparable with other countries’.) This placed the UK 13th out of the original 15 countries of the EU and 1.7 percentage points lower than the EU-14's level (ie, treating the whole of the EU-14 (ie, minus the UK) as one country with one GDP and one total spend on health care) of 10.1 per cent of total GDP[3]. (Note: the difference of 1.7ppts is rounded).

NHS-spending-internationall-comparison-fig-1.png

Figure 1: Total health care spending (public and private) as a proportion of GDP

If we were to close this gap solely by increasing NHS spending (and assuming that health spending in other UK countries was in line with the 2015 Spending Review plans for England), by 2020/21 it would take an increase of 30 per cent – £43 billion – in real terms to match the EU-15 weighted average spend in 2013, taking total NHS spending to £185 billion (see Figure 2).

And of course we may find that by 2020/21 the EU average has moved on, leaving the UK lagging behind its neighbours once more.

NHS-spending-international-comparison-fig-2.png

UK NHS spending to match EU-15 by 2020/21

Compared to OECD countries there is also a gap. Omitting the United States (which heavily distorts the weighted average due to its relatively high health spend and its very high GDP), the OECD spend is 9.1 per cent[4]. For the UK to match this would require total spending to reach £163 billion – an additional 15 per cent or £21 billion – by 2020/21 over current spending plans.

Whether funded publicly or privately, spending more on health will necessarily mean less on other things – either less private disposable income (if the additional money comes from additional taxation) or less on other publicly funded services such as education or defence – or indeed, paying down the UK’s debt and reducing its deficit. Or it means additional government borrowing (which will have to be paid for by increased tax or less spending on non-NHS services). Historically, increases in NHS spending have in the main been achieved by reduced spending on other public services (such as defence) rather than say borrowing or tax increases per se.

Whatever the flaws of international comparisons, it’s clear the UK is currently a relatively low spender on health care – as the Barker Commission pointed out – with a prospect of sinking further down the international league tables. The question is increasingly not so much whether it is sustainable to spend more – after all, many countries already manage that and have done for decades. Rather, it is whether it is sustainable for our spending to remain so comparatively low, given the improvements in the quality of care and outcomes we want and expect from our health services.

[1] Except where stated, capital spending has been excluded from international comparisons as reporting is not as up to date or comprehensive as for current spending. The final estimates for UK (current plus capital) spending matching EU and OECD averages are therefore slightly underestimated.

[2] That is, using public expenditure statistical analyses for UK NHS spend figures in 2013/14 as a starting point, and assuming spending on the NHS in Scotland, Wales and Northern Ireland grows at the same rate as planned for England and set out in the government’s 2015 Spending Review and Autumn Statement.

[3] The 'simple' average for the EU-14 – the average of the percentage health spends – in 2013 was 9.6 per cent.

[4] This is based on treating the OECD as one country with one GDP and one spend on health. The 'simple' average of percentage spends on health is 8.7 per cent.

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Comments

#545667 Malcolm Bourne
Doctor
An NHS trust

Of course it's affordable. We just have a very right wing government who try to convince us all its not affordable allegedly because of austerity but in fact because of their anti-social-care ideology

#545668 K Roper
Doctor
NHS

With regards to our health spending - does the cost of services (eg the amount paid to the hospital for an operation plus recovery time, radiology, etc by the CCGs) differ widely from other comparable countries? Does this impact our 'total spend' and does it require accounting for in these comparisons?

#545669 Jim Bunkers

A good article apart from your conclusion. As an economist you will, of course, understand that as the sole issuer of its own currency the UK Government has no financial constraints and as such the level of funding of healthcare is entirely a political decision.

#545676 Duncan Kennedy
Director
Audit Ready

As always an interesting article and one that highlights the difficulty in comparing systems. At a macro level and taken in isolation this is a concern. Several questions remain for me. When we are comparing systems does this include or exclude social care provision, obviously for the UK this excludes social care but what about the other OECD countries? How efficient is the NHS – how do we compare when it comes to the demands and the services provided i.e. value for money? How do we compare with respect to clinical outcomes? Finally what do we need (and want) to achieve and how much will it cost – is the financial envelope sufficient to deliver this?

#545678 PhilT

The NHS low spend is often held up as an indication of the efficiency of a monolithic state provider free at the point of use. Do we need to normalise the spend by life expectancy post cancer diagnosis, by diabetes HbA1c levels, or some other outcome measures ?

No other country has copied the NHS, despite having over 60 years to do so, which leaves me wondering if it is very efficient or underfunded or both or neither.

#545679 Ffoster
Retired GP

It's a shame to talk about how much to spend on health care without looking at the population and see how unhealthy they they are. The US spends billions on health care but their population is one of the least healthy on the planet. Why spend billions on NHS care if everyone is fit? Of course, they are not fit but fat, and the government is too weak to impose tax on sugar, fat and salt.

#545680 Marion Judd
Retired NHS professional

Have your figures taken account of the actual funding the NHS receives after efficiency savings have been deducted? Also, starving the NHS of funding plus the right wing media smear campaign suggests that government is working to discredit the NHS in order to persuade the public that privatisation is justified which suits the current political ideology of the majority Party.....

#545699 BRIAN GUMBLEY
Director
RECOVERY MH ORG

John once again i read your blog with interest
This country as always been able to afford a quality NHS ----why is it that in the last few years emphasis as been on TAX money in our pockets is the most inportant -------We as a so called caring NATION should be spending more on health we will all need health care sometime in our lives ---how can people compare having more tax money in there pockets to quality of care when needed ---
even those with a good income family, friends aunts,and uncles will at some time require A/E or social care
The Answer is INCREASING NI by a penny or two WILL stop tax dodgers and help rearrange the NHS without hurting everyone to much in there pocket

#545767 Matthew Savage
Director
OCP

You're being a bit disingenuous with the phrase '"if we were to close this gap solely by increasing NHS spending". As you well know, nearly all of the OECD countries that spend more on healthcare as a % of GDP spend more on private healthcare than the UK as a % of GDP also. The implication would be that this deficit should in some part be made up by an expansion of the private healthcare system.

#545819 DR John M. Gallagher
Part-retired GP.
Wessex NHS England/ Southampton CCG

When Blair took office in 1997 the UK was spending 5.8% GDP on healthcare. The three countries spending less were Greece, Portugal and Eire. Not much looks to have changed. The waste of monies spent on recurrent re-organisation makes me shudder. Most people would willingly pay extra if they thought the monies were going directly into health care. Look at the outgoings on private finance initiatives and Blair's scheme for GPs in 2004. Keep politicians off the NHS !

#545828 Charles Bradsha...
Non-healthcare professional
N/a

To move this debate forward we need a measure that we all accept. Surely it's possible by now for economists to have created a measure of health spend comparison that is based on need rather than national resources? Something like the APR for interest rates. This should be per capita based and take into consideration demographics that influence need. Certainly age and maybe socio economic rating or employment status etc. Are The King's Fund working on this or done it already?

#545839 Jeorge Orendi
Hospital Consultant, NHS England
University Hospitals of North Midlands NHS Trust

I worked for 3 years as a hospital consultant in the Netherlands and have since worked for the NHS in England for 15 years. In 2008 I published a Comment in The Lancet, setting the Department of Health for England some targets for 2013, e.g. to halve the annual number per 1000 people of adult emergency admissions to NHS hospitals, and to create the specialty of nursing-home doctors. I am afraid that the performance in 2016 is no better than in 2008. Waiting times for emergency admission and treatment are getting worse, and the adult bed occupancy rate in our hospital is always close to 100%. Journalists should not allow politicians to only state how many more billions they spent on healthcare, in a country with a growing population, and instead demand figures on percentage of GDP. Voters should be asked what in their opinion they find more important in life than their health and the health of their loved ones for GDP money to be spent on, and what they believe, in comparison to similar EU/OECD countries, would be a reasonable percentage of GDP to be spent on health care in England. Let us see this discussion on front pages, and a sudden transformation might occur! If we truly live in a democracy and someone reads this, then all is not lost.

#545843 Dr Umesh Prabhu
Medical Director
Wrightington, Wigan and Leigh FT

One more excellent article by John Appleby. What a pleasure to read. No doubt NHS is very cost effective and good value for the money and is the right way to provide health care to the Public. However, NHS is not the most efficient nor it is safe heath-care. The main reason is poor Board level leadership, poor culture, poor governance and accountability and poor staff and patient engagement.

In a Board of NHS where nearly 80% of Board leaders are non-clinical and only 20% are clinical (Medical and Nurse Directors) sadly finance and targets dominate and in such a culture patients and staff suffer. Sadly it is also true that none of the Board members including Medical and Nurse Directors are trained in leadership. They may have attended some courses but not properly trained as to how to be leaders and many do not get any feedback about their own values, behaviours and leadership.

In such a culture both Medical and Nurse Directors become the part of the same culture of achieving targets and trying to balance the book at any cost! This is the fundamental problem in our NHS.

Where there are good Board level leaders who put patients at the heart and also care for staff (all staff and not simply White staff - also BME, GLBS, disabled, women and so on) and appoint right leaders and promote a culture of staff happiness, staff engagement; these Trusts do well and if this is done across the NHS we can have safest, best and if we stop working in silos can probably save £20 Billion which can be re-invested to transform Health and social care in this country.

It is not that NHS needs more money but also need good leaders, culture, clinical engagement and staff support to transform the NHS.

#545907 Yttap

The services in Europe are NOT free at the point of entry! A visit to a GP which costs around 33 euros to be paid up front will cost the patient around 19 euros out of his pocket. Therefore this comparison is flawed! Back to the drawing board!

#545909 Leslie Samuel Lewis
Retired GP
NHS

I would find these comparisons much more interpretable if expressed in cash-per-patient ( or per capita) terms.

http://www.oecd-ilibrary.org/social-issues-migration-health/total-expend...

#547644 Chris Newby-Robson
IT senior server analysts
Personal

Hear, hear - exactly my opinion. I am not left wing but the shenanigans of this government could easily send me that way. They are a disgrace!

#547648 Will Hobbs

I agree whole heartedly with this. The debate as to whether more can be spent is the wrong focus in my opinion. The question is whether more should be spent. And while hospital beds are full of medically fit patients who are unable to return home because of ineffective social care and A&Es are full of patients who should be seeing their GP, throwing money at Acutes will accomplish very little.

#547668 bob
midwife
eeeerrrrrrrr

you wont tell me anything usefull

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