Pressures in UK Healthcare:
Challenges for the NHS
Carl Emmerson
Chris Frayne
Alissa Goodman
Health spending
“We will rebuild the NHS”
“We will raise spending on the NHS in real
terms every year and put the money towards
patient care.”
Labour Party manifesto 1997
NHS spending since 1979
9
Real increases in spending, 1979 to 2004
8
Percentage change
in real spending
7
6
5
4
3
2
1
0
-1 79-80
82-83
85-86
88-89
91-92
94-95
97-98
00-01
03-04
Increases in NHS spending
“The Government will rebuild the NHS and
improve the delivery of social services by:
...
increasing NHS funding by an
average of 4.7 per cent a year, above
inflation, for three years…”
Comprehensive Spending Review, July 1998
NHS spending since 1979
9
Real increases in spending, 1979 to 2004
8
Percentage change
in real spending
7
6
5
4
3
2
1
0
-1 79-80
82-83
85-86
88-89
91-92
94-95
97-98
00-01
03-04
NHS spending since 1979
9
Real increases in spending, 1979 to 2004
8
Percentage change
in real spending
7
6
5
4
3
2
1
0
-1 79-80
82-83
85-86
88-89
91-92
94-95
97-98
00-01
03-04
Further increases in NHS
spending
In the March 2000 budget, the Chancellor,
Gordon Brown announced:
“by far the largest sustained increase in NHS
funding of any period in its 50-year history”
Budget speech, 21st March 2000
NHS spending since 1979
9
Real increases in spending, 1979 to 2004
8
Percentage change
in real spending
7
6
5
4
3
2
1
0
-1 79-80
82-83
85-86
88-89
91-92
94-95
97-98
00-01
03-04
NHS spending since 1979
9
Real increases in spending, 1979 to 2004
8
Percentage change
in real spending
7
6
5
4
3
2
1
0
-1 79-80
82-83
85-86
88-89
91-92
94-95
97-98
00-01
03-04
NHS spending since 1979
9
Real increases in spending, 1979 to 2004
8
Percentage change
in real spending
7
6
5
4
3
2
1
0
-1 79-80
82-83
85-86
88-89
91-92
94-95
97-98
00-01
03-04
NHS spending
Average annual percentage
change in real spending
Real increases in spending, various periods
6
5
4.7
4
3.1
2.6
3
2
1
0
This parliament,
1997 to 2002
Conservative years,
1979 to 1997
Last parliament,
1992 to 1997
NHS spending
Average annual percentage
change in real spending
Real increases in spending, various periods
6
5
4
4.7
3.4
3.7
3
2
1
0
This parliament, History of NHS,
1997 to 2002
1950 to 2000
Last 46 years,
1954 to 2000
5 years from
CSR, 1999 to
2004
Highest 5-year
increase, 1971
to 1976
NHS spending 1949 - 2004
NHS spending as a share of GDP
7
Percentage of GDP
6
5
4
3
2
1
0
49-50
59-60
69-70
79-80
89-90
99-00
Where does NHS money go?
•
•
•
•
Hospital and Community Health Services
Family Health Services
Central Health and Miscellaneous Services
Departmental Administration
Hospital and Community Spending
100%
HQ Administration
Other
Maternity
Learning Disability
Other Community
Elderly
Mental Health
Acute
80%
60%
40%
20%
0%
1988-89
1997-98
Hospital and Community Spending
100%
HQ Administration
Other
Maternity
Learning Disability
Other Community
Elderly
Mental Health
Acute
80%
60%
40%
20%
0%
1988-89
1997-98
Pressures in UK Healthcare:
Challenges for the NHS
In the second part of the presentation, we ask
what the important issues facing the National
Health Service are now and what they will be
in the future.
Economic justifications
• Equity arguments
• Efficiency arguments
• Social returns to health
• Lack of consumer information
• Problems with insurance markets
• What type of intervention does this justify?
International comparisons
• NHS one form of government intervention
• Healthcare models vary
• Social insurance models in France and
Germany
• Greater reliance on the private sector in
Switzerland and the US
• Countries also differ in terms of actual
spending and on health outcomes
Total health spending in G7 countries
UK
Public spending
Japan
Private spending
Italy
Canada
France
Germany
US
0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15
Percentage of GDP
Source: OECD Health Data
Size of the private sector
UK
Japan
Italy
Canada
France
Germany
US
0
10
20
30
40
Percentage of total spending
50
60
Source: OECD Health Data
Measuring health outputs
Total
spending
US
1
Germany
2
France
3
Canada
4
Italy
5
Japan
6
UK
7
Life expectancy
Female
Male
Infant
mortality
Source: OECD Health Data
Measuring health outputs
Total
Life expectancy
spending
Female
US
1
7
Germany
2
5
France
3
2
Canada
4
3
Italy
5
4
Japan
6
1
UK
7
6
Male
Infant
mortality
Source: OECD Health Data
Measuring health outputs
Total
Life expectancy
spending
Female
Male
US
1
7
7
Germany
2
5
6
France
3
2
5
Canada
4
3
2
Italy
5
4
3
Japan
6
1
1
UK
7
6
4
Infant
mortality
Source: OECD Health Data
Measuring health outputs
Total
Life expectancy
Infant
spending
Female
Male
mortality
US
1
7
7
7
Germany
2
5
6
3
France
3
2
5
2
Canada
4
3
2
4=
Italy
5
4
3
6
Japan
6
1
1
1
UK
7
6
4
4=
Source: OECD Health Data
Cancer survival rates
Five year survival rates
England & Wales
6
Scotland
6
Europe
Men lung cancer
Women breast cancer
10
US
13
England & Wales
68
Scotland
66
Europe
73
US
84
0
10
20
30
40
50
60
Percentage
70
80
90
100
Source: Coleman (1999)
Other measures of NHS quality:
inpatient waiting lists
Number of patients waiting (million)
1.5
1.3
Pre 1988
Post 1988
1.0
0.8
0.5
0.3
0.0
1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997
Source: House of Commons Library / Department of Health
Indicators of quality:
inpatient waiting lists
Number of patients waiting (million)
1.5
Total
Manifesto target
Total > 12 months
1.3
1.0
0.8
0.5
0.3
0.0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: House of Commons Library / Department of Health
Why do we care about waiting lists?
• Whenever there is demand for a scarce good
it will be rationed
• Waiting reduces benefits of treatment
• Increases use of private sector
• For certain ailments some individuals may
decide not to get treated at all
• Waiting times
Indicators of quality: waiting times
10
9
8
Months waited
7
Mean waiting time
Median waiting time
6
5
4
3
2
1
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: House of Commons Health Select Committee
Indicators of regional variation:
per cent of population on a waiting
list
England
North West
London
Eastern
South West
South East
Northern & Yorkshire
Trent
West Midlands
0.0
0.5
1.0
1.5
2.0
Percentage of population waiting
2.5
3.0
Source: NHS Executive (1999)
Indicators of regional variation:
per cent of population on a waiting
list
England
North West
London
Eastern
South West
South East
Northern & Yorkshire
Trent
West Midlands
0.0
0.5
1.0
1.5
2.0
Percentage of population waiting
2.5
3.0
Source: NHS Executive (1999)
Indicators of regional variation:
Inefficient use of inputs?
South Thames
Anglia & Oxford
North Thames
North West
Trent
South & West
West Midlands
Northern & Yorkshire
0
10
Numbers waiting per bed
20
30
40
50
Cases treated per available bed year
Source: Regional Trends, 1999
Variation within and between regions
Highest and lowest rates of death after non-emergency admission
Northern & Yorkshire
North West
London
South East
Eastern
West Midlands
South West
Trent
0
100
200
300
400
Age-standardised rate of deaths per 100,000 cases
500
Source: NHS Executive (1999)
Variation within and between regions
Highest and lowest rates of death after non-emergency admission
Northern & Yorkshire
North West
London
South East
Eastern
West Midlands
South West
Trent
0
100
200
300
400
Age-standardised rate of deaths per 100,000 cases
500
Source: NHS Executive (1999)
Indicators of regional variation:
The impact of performance targets
per cent women seeing a specialist within 2 weeks of suspected breast
cancer
South West
West Midlands
Eastern
South East
England
London
Northern & Yorkshire
Trent
North West
0
20
40
30th June 1999
60
80
100
31st December 1999
Source: Department of Health
Potential indicator of NHS quality:
private medical insurance
Persons covered (millions)
8
Total
7
6
Employer
purchase
5
4
Individual
purchase
3
2
1
0
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
Year
Source: Office of Health Economics / Laing and Buisson (1999)
Private health spending
Private spending as a share of total health spending
20
18
16
Per cent
14
12
10
8
6
4
2
0
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996
Year
Source: OECD Health data
Private health spending in the NHS
NHS private income, in real terms, per cent of 1952 levels
400
350
Per cent
300
250
200
150
100
50
0
1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996
Year
Source: Office of Health Economics
Coverage of private medical insurance
50
Percentage of individuals
Percentage covered by income decile
40
30
20
Average = 12.5 per cent
10
0
Poorest
3
5
7
9
Income decile
Source: Family Resources Survey, 1994-95 to 1997-98
Coverage of private medical insurance
50
Percentage of individuals
Percentage covered by income decile
40
30
20
Average = 12.5 per cent
10
0
Poorest
3
5
7
9
Income decile
Source: Family Resources Survey, 1994-95 to 1997-98
Coverage of private medical insurance
50
Percentage of individuals
Percentage covered by income decile
40
Employer purchase
Individual purchase
30
20
10
0
Poorest
3
5
7
9
Income decile
Source: Family Resources Survey, 1994-95 to 1997-98
Who has private medical insurance?
Characteristics of those more likely to be covered:
•
•
•
•
Age and gender
• 40 to 60 year olds
• Males
Family situation
• Couples and households
without children
Income and savings
• Higher income and higher
levels of savings
Education
• Those with higher levels of
qualifications
• Those still in education
•
•
•
•
Employment Status
• Employees more likely to be
covered than self employed
or those not in work
Housing tenure
• Owner-occupiers
Occupation
• Managers, technical staff
and professionals
Region
• London, South East and
West Midlands
A subsidy for private medical insurance?
• Subsidy existed for over 60s prior to July 1997
• Reduces burden on NHS spending
• But subsidy itself would add to public spending
• Could a subsidy be self-financing?
• Depends on how many additional people take
out PMI
• Extremely unlikely to pay for itself
Policy issues
• Support for the National Health Service
• Those with PMI less likely to support NHS spending
increases
• Support among those with PMI still relatively high
• Freeing up of public spending
• Presence of PMI benefits the NHS
• Potential effect of improvements in NHS quality
An ageing population
Millions
18
16
projected 85+
14
projected 65-84
12
85+
10
65-84
8
6
4
2
0
1901 1931 1951 1961 1971 1981 1991 2001 2011 2021 2031 2041 2051 2061
Year
Source: Annual Abstract of Statistics / Government Actuary’s Department
An ageing population
Millions
18
16
projected 85+
14
projected 65-84
12
85+
10
65-84
8
6
4
2
0
1901 1931 1951 1961 1971 1981 1991 2001 2011 2021 2031 2041 2051 2061
Year
Source: Annual Abstract of Statistics / Government Actuary’s Department
NHS expenditure, by age
2,500
£2,256
£2,011
£ per head
2,000
£1,391
1,500
1,000
£785
£461
500
£183
£295
£410
0
All live
births
Age 0-4
Age 5-15 Age 16-44 Age 45-64 Age 65-74 Age 75-84 Age 85+
Age group
Source: Department of Health
Pressure on the NHS from an
ageing population: Baseline forecasts
140
123
100
Per cent
131
128
127
114
120
80
129
75
81
87
89
95
100
106
60
40
20
0
1951 1961 1971 1981 1991 2001 2011 2021 2031 2041 2051 2061 2068
Year
What is the actual effect of ageing?
• Health spending could relate to lifetime
remaining rather than calendar age
• Evidence from Scotland (Hanlon et al,
1998), Switzerland (Zweifel et al,1999) and
the US (Cutler and Meara, 1999)
• Demographics still matter
• Timing of expenditure
• Impact of changing birth rates
Pressure on the NHS from an
ageing population: Baseline forecasts
1.0
0.8
0.8
0.6
No change in life expectancy
0.6
0.5
Per cent
0.4
0.4
Baseline projections
0.8
0.4
0.3
0.2
0.2
0.1
0.0
-0.2
-0.2
-0.4
2000s
2010s
2020s
2030s
Year
2040s
-0.2
-0.3
2050s
-0.1
-0.2
2060s
Future pressures are manageable?
• Future patterns of ill health
• Accuracy of population projections
• Other pressures on the NHS
• Increasing wages in the economy
• Increasing public demands fuelled partly by
technological advance
Policy conclusions
• NHS one solution to the allocation of healthcare
• High degree of change over the last 50 years
• How well has the NHS coped?
• Role of private sector
• Increased over the last two decades
• Could grow further in future?
• Substantial planned increases in NHS spending
• Should improve quality of the NHS
• Will this be sufficient to meet public demands?