News Release

UK health spending won't reach European Union average with current growth rates

Peer-Reviewed Publication

BMJ

Getting UK health care expenditure up to the European Union mean. What does that mean?

The government's stated intention to equal the European Union (EU) average spend on health care by 2006 cannot possibly be realised on the basis of current growth rates, concludes a study in this week's BMJ.

A study from the Office of Health Economics shows that the government's plan to reach an NHS spend equal to 8 per cent of gross domestic product (GDP) by 2006 is based on faulty calculations. The UK's GDP spend on health care is currently 6.7 per cent, one of the lowest in the EU.

The government intends to increase the NHS budget by 5 per cent a year, after adjusting for inflation, to reach its target. But, argue director Adrian Towse and associate director, Jon Sussex, the real annual growth required to reach this is 5.8 per cent from next year.

Furthermore, the UK's low GDP spend drags down the EU average. The rest of the EU actually spends 9.1 per cent of its GDP on health care: to bring the UK in line with the rest of the EU, therefore, say the authors, means the same GDP spend. And to achieve that, the UK is looking at an annual increase in the health budget of between 7.7 to 8.7 per cent. The UK does not include nursing home care in its health spend calculations, unlike some of the other EU countries; if it were to do so, the lower figure would apply.

As a political goal, aiming for the average EU rate of expenditure is sensible, say the authors, because GDP is strongly linked to spending on health care, and the average income in the UK now matches that of the EU. But, they conclude: "Without additional funds, the NHS will struggle to meet the government's ambitious agenda for a more effective and consumer responsive, 'modernised' health service."

And the bad news is, that even if the government sticks to its 8 per cent target, other areas of public expenditure will suffer unless taxes rise, to compensate, conclude the authors.

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Contact:

Adrian Towse, Office of Health Economics, London. Email: atowse@abpi.org.uk


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