Aug 042015

The constant knee-jerk response to the NHS’ perennial financial tribulations – more here – usually takes the form of a politicised barrage of criticism about how ‘Dave and his cronies’ are deliberately starving the health care system of cash in order to somehow force it into being rescued by a cabal of privateers crouched slavering in the wings waiting to pounce and bleed dry what is patently not a cash cow. Empirically this makes no sense, but it’s worth having a look at just how ‘cash-starved’ the NHS really is. Figure 1 below from independent think tank The King’s Fund shows UK spend vs a number of developed countries, including some – often cited by the political left as examples of progressive health care utopias – who are ahead in terms of overall expenditure. Indeed, those countries (excluding the US for its obvious outlier status) spend a maximum of about 15% more overall on health (not the 40-50% trotted out by the usual suspects). Nevertheless, 15% (or an additional 1-2% of GDP) is a very significant amount and would undoubtedly dig the NHS out of a hole, but where is that money coming from? The figure clearly shows that almost without exception (the exception being Norway, which can reap the rewards of decades of prudent investment of its oil revenues) all of those countries have a higher private component of health care expenditure. Indeed, if all private components were removed it would look as if the UK spends no less of its public money on health (in fact possibly on the contrary it might even spend more) than other developed states.

Private-public health care spending in OECD

Figure 1. Private-Public Health Care Spending in OECD (The King’s Fund)

Data published by The World Bank (see summary in Figure 2, and original data at bottom of this post) would indeed seem to support this viewpoint. While the data for % GDP health, and by implication health care spend per capita are lower in the UK vs other high income OECD countries, UK public spending on health is clearly shown to be higher. What else can explain this gap other than the under contribution of the private sector hinted at in Figure 1?

Back to Figure 1, and another way of interpreting this chart is to look at those countries that spend overall less than the UK but almost invariably have a higher private component. Of course we are told nothing here about health outcomes but I doubt that the populations of Korea or Ireland are significantly more sick than Britons. So, this could well be an indicator that a higher increased private health care expenditure component is an efficient way of driving down overall costs with no detriment to outcomes. But why let reasonable questioning stand in the way of ignorant apoplexy and a rational debate on the future of the NHS?

Health Care Spend World Bank Data

Figure 2. Health Care Spend World Bank Data



Data from World Bank


Data from World Bank


Data from World Bank