How much is the NHS going to cost us?

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How much is the NHS going to cost us?

Ben Chu

BBC Verify policy and analysis correspondent

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The amount of money the *** spends on health, predominantly on the NHS, has been rising for decades.

And as the *** population ages and people demand access to new medicines and treatments, there is every likelihood that the national bill will continue to grow.

So how much could the NHS ultimately end up costing the nation? And is it possible to get better value for the money we collectively spend?

BBC Verify has examined some of the key numbers.

How much do we spend on health?

Shortly after the NHS was founded, in 1949-50, total *** health spending was around £17bn in today’s money.

By 2023–24 it had grown to £226bn.

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in 2022-23 was around £3,300 in England and Scotland, £3,600 in Wales and £3,500 in Northern Ireland.

In the Autumn Budget last year, Chancellor Rachel Reeves

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an additional £26bn a year for the English health budget by 2025-26, which will automatically increase the resources available to the devolved nations.

As a share of the overall economy – or GDP – spending on health has massively increased over the past 70 years.

In 1949-50, health spending was only 3.6% of GDP. In 2023-24, it had more than doubled to 8.1% of GDP, after peaking at more than 10% in the Covid pandemic.

Health spending jumped in the pandemic due to the costs of vaccinations and the “test and trace” programme.

Around 80% of total health spending is funded by the government in the ***, mainly going to the NHS. The other 20% comes through private insurance schemes or out-of-pocket costs.

That means health spending as a share of total government spending has also considerably increased.

In the middle of the 1950s, health accounted for around £1 in every £8 the government spent.

Today it’s roughly £1 in every £3.

How does that compare to other countries?

Despite that surge in health spending in recent decades, the *** is by no means an outlier among rich countries.

In 2022, using comparable data on public health spending, the *** was spending around 9.3% of GDP.

That was higher than Canada (7.9%) and Italy (6.8%) as well as the EU average, but less than Germany (10.9%) and France (10.2%).

The US was the real outlier, spending 14.1% of GDP on health, largely because America has a private insurance system with few of the cost controls of other nations.

And those countries have, like the ***, seen health spending rise considerably in recent decades, driven up by growing demand for new medical treatments and ageing populations.

What’s going to happen to NHS spending in future?

Last year, the Office for Budget Responsibility (OBR), the government’s official forecaster,

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there was every likelihood there would be continued upward pressure on *** public health spending, citing those same factors: an ageing population and more demand for new medicines and treatments.

It also cites rising ill health among the population as one of the contributors to rising spending, albeit not the dominant one.

The amount of health spending on an individual rises dramatically as they grow older. Average annual spending per person on those aged 45 is around £2,000. For those aged 85 it is £13,000 a year.

The OBR projects that the proportion of the population aged 65 and over will rise from around one in five today to one in four by 2070.

As people’s incomes grow, research suggests they are typically willing to spend more of those incomes on healthcare, which in the *** is done mainly through the taxpayer-funded NHS.

In its central forecast, the OBR projected *** public healthcare spending will rise by around 3% every year, after adjusting for inflation. This would be broadly in line with average growth over recent decades, although the rate has fluctuated under different governments.

The OBR estimates this trend would add up to roughly an extra 1% of GDP going on public health spending every decade going forward.

That would take public health spending from around 8% of GDP in 2024-25, up to 14.5% of GDP by 2073-74, equivalent to around £180bn in today’s money.

However, this would also depend on the long term growth rate of the economy. The OBR assumes public health spending will grow roughly twice as fast as the overall economy.

If that path of spending transpired, it would also likely mean health spending accounting for an even larger share of total government public service spending.

How do we get better value for money from health spending?

Many politicians argue it’s important for the NHS to deliver higher levels of productivity, in other words, to spend money more efficiently in order to keep the national bill under control.

Productivity growth in the NHS has long lagged behind productivity growth in the rest of the *** economy.

Last year, the OBR looked at what would happen if NHS productivity grew faster than currently expected in the coming decades.

This, the OBR said, could curb the overall rise in public health spending. It might rise only to 11% of GDP by 2074, rather than to 14.5%.

The recent indications of productivity growth in the NHS, however, are unclear.

The

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from the Office for National Statistics are that in the second half of 2024 NHS measured “inputs” – mainly in the form of more doctors and nurses hired – were 32% higher than they were before the pandemic in 2019.

But measured “outputs” – things like operations completed and patients discharged – were only up by 7%.

This meant that *** public sector health productivity was still around 19% lower than it was five years previously – and showing no signs of sustained growth.

However, measuring productivity in the public services is far from simple and the ONS has stressed that these statistics are still only “in development”.

Other estimates from

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and the

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– the independent economic research institute – point to an improvement in productivity in hospitals in England more recently, suggesting a corner might have been turned in the delivery of health services after the shock of the pandemic.

But regardless of the statistical discrepancy, most experts agree that improving productivity in the health sector in the medium and long term is an important objective. And the extent to which it is delivered will play a key part in determining how much the NHS ends up costing the nation in the coming years.

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#NHS #cost

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