Anita Charlesworth: The Funding Outlook for Health Care

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Anita Charlesworth: The Funding Outlook for Health Care

  1. 1. The Funding Outlook for HealthAnita CharlesworthChief EconomistMarch 2013Twitter: #NTSummit © Nuffield Trust
  2. 2. UK Health Spending, government spending and tax 1978-79 to 2016-1760.050.040.030.020.010.0 0.0 health other public services welfare and debt interest tax receipts © Nuffield Trust
  3. 3. The magic circle: health spending increases rapidly, overall public spending and tax fallsShare of Total Public Health Other public Welfare and ReceiptsGDP Spending spending services debt interest1978-79 45.1% 4.4% 25.9% 14.7% 40.1%2007-08 40.7% 7.1% 20.3% 13.2% 38.6%Difference - 4.4 +2.7 -5.6 -1.5 -1.5Source: OBR, HMT PESA 2012 In 2016-17 spending as a share of GDP and receipts as a share of GDP will be at the average for the 20 years pre-crisis (40% and 38%). 2 key differences: Health spending will be much larger (2 percentage points of GDP) and spending on other public services will be at the share last seen in at the end of 1990’s. © Nuffield Trust
  4. 4. The impact on aggregate public spending © Nuffield Trust
  5. 5. Closing £13 billion Funding Gap: 2010/11 to 2014/15 £105 Funding pressures on the NHS in England Funding pressures after for pay restaint Funding pressures after pay restraint and managing hospital activity for chronic conditionsFunding (£billion in 2010/11 prices) £100 Funding pressures after pay restraint, managing Pay hospital activity for chronic conditions, and productivity savings reduction: Funding allocation based on 2010 spending review £5bn £95 Disease management: £3bn Acute QIPP Actions: £4bn £90 £85 2010/11 2011/12 2012/13 2013/14 2014/15 Year © Nuffield Trust
  6. 6. Initial Progress in 2011-12? Expected Actual Difference Emergency Admissions trend 5,784,376 5,411,015 -7% Emergency Admissions with QIPP actions 5,648,234 5,411,015 -4% Emergency Bed Days trend 39,639,520 35,600,921 -11% Emergency Bed Days with QIPP actions 37,352,528 35,600,921 -5% Planned Admissions trend 8,766,957 8,735,584 0% Modelled Planned Bed Days 16,747,173 16,555,415 -1% Planned Bed Days with QIPP actions 16,159,549 16,555,415 2% OP Appointments 67,079,975 72,799,662 8% OP Appointments with QIPP actions 62,572,388 72,799,662 14% A&E Attendances trend 15,503,662 17,602,055 12% © Nuffield Trust
  7. 7. Variation in labour productivity at selected providers inEngland: 2006/07 to 2011/12 © Nuffield Trust
  8. 8. Percentage changes in spending by type of care:2010/11 to 2011/12 © Nuffield Trust
  9. 9. Closing £11 billion Funding Gap: 2014/15 to 2017/18 £105 Funding pressures after pay restraint, managing hospital activity for chronic conditions, and productivity savings Funding pressure after releasing all semi-fixed costs from QIPPFunding (£billion in 2010/11 prices) £100 Funding pressures after releasing all semi-fixed costs Releasing semi-fixed from QIPP, and management of activity for chronic costs: £2bn conditions Funding pressures after releasing all semi-fixed costs Disease Management: from QIPP, management of activity for chronic conditions, and extension of pay restraint £2bn Flat Real £95 Continued Pay Restraint: £3bn Remaining Gap: £3bn £90 £85 2014/15 2015/16 2016/17 2017/18 Year © Nuffield Trust
  10. 10. Earnings will be key 2011 2012 2013 2014 2015 2016 2017Nominal 2.2 2.7 2.2 2.8 3.7 4.0 4.0averageearningsgrowthGDP 2.7 2.3 2.0 2.0 2.0 2.0 2.0deflatorNominal 1.7 1.7 2.5 2.5 ? ? ?NHS pay billper headgrowth Source: OBR 2012, NHS employers 2012 © Nuffield Trust
  11. 11. Conclusions• From 2010/11 to 2014/15 the NHS faces its tightest budget of last 50 years.• This period of austerity is likely to extend at least until 2017-18.• Only a even larger cut in other public services or welfare or relatively large tax increases would allow NHS funding to grow at historic levels. 1p extra on income tax raises around £4 billion a year.• Without unprecedented productivity gains, there is likely to be a rapid growth in the gap between the demand for care and the ability to provide high-quality services.• Although the NHS is delivering headline savings its not clear that it is making the necessary progress on service productivity and models of care.• The scale of workforce cost growth after 2015 will be crucial. © Nuffield Trust

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