How does NHS spending compare with health spending internationally?

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In 2000, current spending1 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 plans2, 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 GDP3. (Note: the difference of 1.7ppts is rounded).

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.

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 cent4. 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.

Comments

Mojo Hand

Comment date
27 April 2020

Comparing wages is only useful if you also compare the average cost of living, any additional benefits either from the employer or from the state and the work (responsibilities etc).

I know nothing about the work of nurses in France (for example), but do they have an equivalent to Health Care Assistants, who in the UK do much of the work nurses used to do but are paid significantly less?

I think you would also have to compare the number of Doctors, Nurses, Health Care Assistants, Cleaners and Administrators (for example) employed.

Mojo Hand

Position
Engineer,
Comment date
27 April 2020

The NHS is funded by tax payers but is used by everyone...

Mojo Hand

Position
Engineer,
Comment date
27 April 2020

Compares Apples to Cucumbers.

Other OECD countries have completely different systems to the NHS, many of them funded privately by insurance. Those schemes that are funded through taxation, e.g. the NHS, directly affect the nation's GDP, the amount of money spent in the nation. The more money spent by government, e.g. on the NHS, the bigger the GDP. This effect skews the percentage and IS NOT a reliable indicator of, well, anything.

Any measurement needs to be standardised, e.g. typical hospital budgets against outcomes. Comparing disparate systems will not provide enough commonality to be useful.

Simon O' Connor

Comment date
29 October 2018

By not distinguishing between public and private spending you have greatly diminished the usefulness of this analysis

Will Richardson

Position
Risk analyst,
Organisation
Civil Service
Comment date
07 July 2018

Clearly it's underfunded and, in accountancy bottom line terms, it's "efficient".

Newminster

Position
Journalist (retd),
Comment date
24 June 2018

I’ve lived in France for the last eight years and feel infintely more comfortable in the French health system than I ever did in the NHS.
My wife suffered a severe gash to her leg a year ago which because of not being treated quickly enough (our fault!) eventually meant 10 days in hospital followed by nearly a month of hospitalisation à domicile with a drain in the leg, daily visits from the “district nurse” and equipment supplied by prescription, all at no charge.
I was recently diagnosed with early stage prostate cancer and immediately transferred to the AFD (affection de longue durée - long-term illness) system which by-passes the usual 2:1 split of costs for treatment.
All treatments connected with this will be paid for by the state, including the cost of transport to/from the hospital for the radiotherapy that starts next month. And all this is controlled through the patient’s carte vitale, a system which appears to be near-foolproof while the NHS seems incapable of operating any sort of efficient workable computer system.
And there is no political falling out over the health system here. It is not seen s macho to decry or to support it or seek to change it except where it can be improved for the patient. It is literally not of any political significance. It just is!
And the longesr I have ever had to wait for an appointment was four weeks for an MRI scan — some specialists are obsessed with the things! — and that included Christmas and New Year!

Jeff Davis

Position
Retired,
Organisation
G T Davies
Comment date
20 June 2018

Very right wing government ? Hardly . We are the only country with a “ National Health Service “ funded by taxes . Nearly all the rest of Europe uses an insurance based system , funded in many varieties of ways . Whenever any discussion arises , the N H S lobby points to the American system as if that’s what is being planned . We need to raise our lowly ranking on the WHO efficiency table of 18 th . France ranks number one with both Spain and Portugal ranking above the U K . Interestingly , the Americans have virtually the same sacred cow status in their privately insured system . I’ve lived there and never found an American who wanted to copy our system , and that included Democrat voters . Even President Obama dare not mess too much with it , just disallowing higher premiums for pre existing conditions and introducing fines for not having a “ plan “ This did achieve a jump from 85% to 91% of Americans with a plan but many young people are still winging it as they don’t think they will get ill .For the avoidance of doubt as the lawyers say , I am not advocating the U S system . I just thought i’d throw that in out of interest as I lived there for five years In my opinion we need to look at the best performing countries on that table and try to learn some lessons . I’m not holding my breath though !

Azzza

Position
User of nhs/ professional,
Organisation
Local government
Comment date
24 May 2018

It would be interesting to know how much money is spent by our nhs avoiding treating patients. Clinics run by physios or nurses whose role it is to prevent a patient (where scans etc have already been done) from obtaining a surgeons opinion for example. Ways of avoiding targets for treatment times such as patients who suffer a complication but are already in the system, who don't count for targets. Clinic and surgery appts that they have no intention of keeping and cancel at short notice.
The statistics also do not include the number of people who are no longer economically active due to delays in nhs treatment. Many conditions if treated swiftly will mean the patient remains in work and paying taxes. The time wasted jumping through hoops before treatment starts can mean they end up on benefits and will struggle to get new employment after treatment finally commences. There are far too many people in the nhs whose job is making it look like people are receiving some sort of attention,but if instead, the money was spent on treatment, that would speed recovery and the saving to both nhs and state would be huge

David Porter

Position
Partner,
Organisation
Apposite Capital LLP
Comment date
14 May 2018

It would be interested to see the relative number of admin staff as I fear that one of the reasons we have no doctors, nurses or equipment is because we have no IT and an army of admin and non medical management staff

Sonia Moorehead

Position
Manager,
Organisation
https://homehealthtulsa.com
Comment date
19 March 2018

Thank you for the great and informative article. Maybe it is a very hard to understand but thank you for the important details you shared.

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