The last financial year saw NHS trusts report a combined deficit of over £2.45 billion and it is widely acknowledged that the NHS can no longer deliver what is expected from it due to chronic underfunding.
This desperate financial situation created by the Conservative government has led many people to wonder about the long-term future of the NHS. At present a House of Lords select committee is hearing evidence on the long-term sustainability of the NHS. Commentators, including Chris Hopson of NHS Providers and Simon Stevens have spoken of rationing and new charges.
Any decision on long-term sustainability must be based on adequate projections of just what will be expected of the NHS in the future. In September 2016 new projections from the Office for Budget Responsibility (OBR) give some idea of just how much money will be needed for the cost of healthcare over the next few decades.
For the first time the OBR projections for the NHS included the effect of ‘other cost pressures’ as well as demographic changes and changes due to income factors (people generally demand more out of healthcare as their incomes rise). ‘Other cost pressures’ are a combination of factors, that include increasing relative health care costs (compared to other sectors of the economy), the impact of advances in technology and the rising prevalence of chronic health conditions.
These updated projections show that we will need to spend more as a percentage of GDP on healthcare over the next few decades – from the current 7.4% to 8.8%-8.9% by 2030/31. In contrast to other commentators, John Appleby of the Nuffield Trust, believes this increase is sustainable in the long-term and could be paid for via general taxation.
According to Appleby this new growth projection in GDP is roughly equivalent to a real increase in health spending of just under £100 billion over the next 15 years – from £139 billion to £237 billion in 2030/31, at 2015/16 prices. The OBR’s projection means an annual real growth of 3.5% to 2030, less than the NHS’s historical average annual growth rate of 3.7% from 1950.
In international terms a rise to 8.8% GDP in 2030 would take the UK up to the level of 2015 heathcare spending in France, the Netherlands, Denmark, Sweden, Germany and Japan. However, as these countries are likely to also increase healthcare spending, the UK would continue to lag behind. Appleby notes that the projections “provide a strong indication that – judged historically and across countries – spending increases are sustainable.”