Saturday 26 June 2010

Why NHS spending cannot be cut

But it is not just the politics of the situation that demands health spending is protected; there is actually a very good practical reason for it too, which is that try as some post war governments have to shave money off the health budget, no-one has ever succeeded in doing it. Mrs Thatcher tried, and so did the spending squeeze of the Lamont/Clarke years. None of them were successful. Health spending continued to grow in real terms right through these periods of fiscal retrenchment. Even if the Government thought it desirable, it would in practice be virtually impossible.
Why is this? Lack of will or determination has little to do with it. Rather, it is because public expectations of health care rises at a far faster rate than other public services, including education. For every treatment which gets more cost effective over time, there are loads of new life enhancing and extending ones coming up in the wings. Patients reasonably demand the latest and the best.
healthspendinggraph
Apologies for the almost illegible reproduction, but as you might be able to see from the chart above, UK expenditure on health, including private, trails other advanced European economies as a percentage of GDP by a considerable margin, and that’s even after taking account of much of the big increase in health spending that took place under the last Labour Government. British spending is infact below the OECD average and as little as half what is spent in the US.
Even accepting that much of this shortfall is caused by British reluctance to finance health spending privately, it is still a quite shameful gap. It’s a problem, but UK citizens expect their healthcare to be state funded. These attitudes plainly need to change. The Government could help matters enormously by establishing some form of state sponsored private health insurance scheme, such as exists in France. Most private health insurance in Britain is a waste of money, with the costs of treatment scandalously recouped through higher premiums in subsequent years.
Failure, or reluctance, to find privately funded solutions makes it virtually impossible to cap ever growing state healthcare spending. The demographics of an ageing population make the pressures even worse. Health spending tends to be back end loaded, with the vast bulk of it falling in the final years of life. As more people survive into old age, the overall costs of the NHS will continue to rise steeply.
Many years ago, I attended a lunch with Professor Richard Doll, the physiologist credited with establishing the link between smoking and lung cancer. Also at the lunch was a then prominent member of the anti-smoking lobby, who complained bitterly about the health costs to the nation of this life threatening habit. To the contrary, replied Professor Doll. Smokers tend to die young before they become a burden on the taxpayer, and net net therefore cost rather less in healthcare than someone who lives to a ripe old age. The same argument might be made about obesity, which costs the nation heavily while the sufferer is still alive but saves mightily in later years because of premature death.
But enough of this macabre analysis. The bottom line is that health spending cannot be cut even if the new Government wanted to. The political challenge rather is that of introducing fair methods of part payment, for though David Cameron may succeed in sustaining public spending on healthcare, he’s never through tax funded means alone going to keep pace with exponentially rising expectations.

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