NHS funding: why is more government support needed?

27 November 2017 (Last Updated November 27th, 2017 11:18)

At the Health and Care Innovation Expo, Simon Stevens called on the government to increase funding for the NHS, in order to address increasing demand and ever-rising costs.

NHS funding: why is more government support needed?

At the Health and Care Innovation Expo, Simon Stevens called on the government to increase funding for the NHS, in order to address increasing demand and ever-rising costs.

A month later Philip Hammond, the UK Chancellor of the Exchequer, presented his autumn budget, pledging an additional £1.6 billion for the NHS in 2018-2019, which is £2.4 billion less than the £4 billion requested by Mr Stevens.

Funding for the NHS in England is at a record high of nearly £124 billion in 2017-2018, but even with promises of an additional £1.6 billion next year front-line staff believe budgets will still be stretched and patients will experience increased waiting times.

But what are the key issues driving the ever-rising costs?

Rising population age boosting demand

In 1948, the year the NHS was launched, the life expectancy in the UK was 66 for men and 70 for women.

During the intervening years life expectancy has increased to 79 for men and 82 for women, thanks to improvements in nutrition, public health and medicine.

Many see the rise in life expectancy as evidence of the NHS’s success – but if this is the case, then it is fair to say that it is the victim of its own success.

Average annual spending on a 65-year-old patient is believed to be twice that of the spending on a 30-year-old patient, and recent forecasts suggest that between 2015 and 2025 the number of people aged 65 and older living in England and Wales will increase by 19.4%, from 10.4 million to 12.4 million, while the number living with disabilities will increase from 2.25 million to 2.81 million.

Escalating drug costs

In the UK patients are not charged for their public healthcare, and the NHS is by far the largest buyer of pharmaceutical products.

While the NHS is experiencing increased demand, the pharmaceutical industry is also undergoing a period of change, with R&D slowing and many companies switching from primary medicine to specialised or personal medicines.

Personalised medicines are designed for smaller patient populations and often incur higher R&D costs, which in turn inflates drug prices.

Cost saving measures can only go so far

There are measures in place to try to address the cost challenges, and make the most effective and sustainable use of the NHS’s resources.

The National Institute of Health and Care Excellence (NICE) only approve drugs that are clinically proven to be cost-effective, and the Department of Health tries to negotiate the lowest possible prices with drug developers. Both these organisations aim to provide.

However, there is only so far that these measures can go, and they also create tension between the NHS and the pharma industry.

With the government funds promised in the budget likely falling short of requirements, it seems that further innovation will be needed from some quarter if the NHS is not to spiral further into its funding crisis.