Long-term NHS expenditure trends and affordability constraints
Commissioned by the Department of Health, this technical paper provided a high-level, exploratory analysis of long-term trends in government healthcare expenditure in the United Kingdom, measured as a proportion of GDP, share of government spending and in real per capita basis.
Preliminary findings highlighted in the report include:
- Like other OECD countries, government healthcare expenditure in the UK has increased markedly since the 1950s in real per capita terms and as a share of total government spending.
- Barring a major crisis, this secular trend is likely to continue in the decades ahead, albeit possibly at a slower pace than in recent decades.
- However, trends over the last 64 years show there are plausible constraints for future healthcare spending which set effective ceilings and floors to future trends in healthcare spending.
- Within those global parameters, large and sustained increases in real healthcare spending per capita can be expected to pose significant affordability challenges for government.
- Conversely, falls in real per capita government healthcare spending are unlikely to be sustainable for a prolonged period. History shows prolonged declines to be rare.
- In recent years we have moved from a period of above-median growth in real per capita government healthcare spending to a period of below-median growth. The current period may come to be seen as an important inflection point for healthcare spending. However, ultimately we expect to see regression to the median in healthcare spending.
These assumptions are dependent on a number of underlying assumptions and the CfWI has suggested that they would therefore benefit from further examination within the paper.