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.

  • 1Except 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.
  • 2That 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.
  • 3The 'simple' average for the EU-14 – the average of the percentage health spends – in 2013 was 9.6 per cent.
  • 4This 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

StraightWhiteC…

Position
IT,
Comment date
21 February 2018

I don't give a single flying rat about what percetage our GDP you believe should be spent on socialised medicine. This money is NOT yours to spend. Keep your hands in your own pockets. The only thing you should be conrned about is quality of services provided to customers. Central planning is like locking the steering wheel in your car. That is precisely why some very wealthy countries (like Canada) have absolutely appalling healthcare system. If you think goverment should control every aspect of your life I strongly suggest you move to North Korea, since most of British people are fed up and tired of reinacting soviet union in Western Europe.

neil

Comment date
05 February 2018

Of course, every economist understands that unlimited printing of money is a great idea. The Weimar Republic proved it, and recent case studies in Venezuela and Zimbabwe just reinforce the lesson.

rk

Comment date
27 January 2018

Deliberately misleading. There are 28 countries in the EU selectively choosing countries to manipulate figures.
Using a weighted average manipulates the comparison even more as 1-2 large will distort figures.
Also its not just about money it is about values for money take America it spend a lot more but it doesn't mean theire healtcare is better. Moving to a private marketplace model (like Singapore and Switzerland) is shown to be the best value for money which is what the government id doing

alan buckingham

Comment date
23 January 2018

You read wrong. As a proportion of GDP UK spends 9.7% of GDP on healthcare. That's above the OECD average http://www.oecd.org/els/health-systems/health-data.htm The Kingsfund data in this article is in error (it fails to include social care, unlike other countries, for example) and it should have been corrected. Scotland spends a further 15% extra, making it nearly the highest spending nation in the EU as a proportion of GDP. And Scotland's outcomes? Worse even than England's. And, in turn, England's outcomes in terms of cancer survival and stroke survival rates rival Latvia, not France or Germany.

Steven

Position
Consultant,
Comment date
22 January 2018

Actually the numbers provided are divisive and manipulative. Only a fwit would fall for such moronic rhetoric. Nearly all the countries on the list saw there GDPs fall dramatically in the gfc, on top of this their GDPs, in all but 2 cases, are far smaller than the UKs. The fact is we pay much more pro rata then any of the countries. Why is that? Simply put doctors going to agencies to perform the same job on locum wages has cost billions in the last 10 years. Sorry won't be long before ai gets shot of 50% of them anyway.

JKG

Comment date
20 January 2018

I just read on wiki that the French spend about 11.6% of GDP on the health service. UK spends under 7% I believe.

JKG

Position
Retired Engineer,
Comment date
20 January 2018

I did not realise that our % GDP spending on health was so low compared to say France. The NHS clearly isnt working well enough to meet demands. Perhaps we should copy the French, increase funding and introduce some charges for some treatments.

Jeanne

Position
NHS Activist,
Organisation
KONP (Keep Our NHS Public)
Comment date
12 January 2018

As a 70yr old, thank you! Phew!

will

Position
builder,
Comment date
11 January 2018

health insurance costs a 20 something around £10 - £15/week
we need a culture of young people starting insurance at this age to maintain low premiums and thus be able to free up operating theatre etc from elective surgery and the like.
ps with growing and raging population, should fertility treatment really be tax payer funded?

Paul Wenman

Position
Owner,
Organisation
InvestAssure
Comment date
03 January 2018

"Keep politicians off the NHS !" you say. I agree. Furthermore.keep GPs, nurses and surgeons off the NHS. It is often said that we should leave the NHS to those who are working at the front line. Of course, within their sphere they know more than others, just as a petroleum engineer knows more about operating an oil platform than an investor. But oil companies are not run by the engineers operating the platforms - they are too busy and need to focus on their own priorities, just as a GP needs too. Oil companies are runs a a series of business units, each with its own objectives, budgets and authorities, organised to achieve overall business goals. So should the NHS be run, allowing as much outsourcing of services as needs be to deliver results to we the investors. Part of that solution, of course, should also involve we the consumers making partial payments at point of service, accordng to ability to pay, and also allowing we the customers to make top-up insurance payments to gain access to private treatment if we wish, using our basic NI entitlement as a base contribution.

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