Published 25 September 2008, doi:10.1136/bmj.a1040
Cite this as: BMJ 2008;337:a1040

Head to Head

Should there be a ceiling on what percentage of GDP countries spend on health? Yes

¹ Imperial College, London SW7 2AZ

Demands on healthcare budgets seem to be ever increasing. Nick Bosanquet believes it is time to limit spending, but Werner Christie (doi:10.1136/bmj.a1036) argues that it should reflect medical needs not economic performance

From 1990 to 2005, health spending in real terms rose almost twice as fast as gross domestic product (GDP) across countries in the Organisation for Economic Cooperation and Development—4.5% compared with 2.5%. This is unsustainable in an era of lower growth as the UK government, for example, says it has reached the limits of taxable capacity. A new approach is therefore needed. For the UK and for much of old Europe it would be strong and timely discipline to plan for health spending to increase at the same rate as GDP for the next five years. This would send a message that the key challenge is to get more value from the vast sums of money currently being spent on health services.

Apart from the United States, most developed countries now spend around $3000 (£1500; 2000) per head on health, which is 8-9% of GDP. If spending was capped to current percentages of GDP this amount would rise to $3300 over the next five years, assuming growth of 2% a year, while faster growth could raise it to $3600. The cap is a signal about priorities—that it is far more important to use the $3300 more effectively through system redesign and better financial management than to raise it to $3600.

Value for money

In the ideal situation we would make decisions on health spending according to value. This would be especially timely given the strong evidence from both the US and Europe about the gains of such an approach for effective health care. From 1990 to 1998 the return on health expenditure was 148% in the UK (for every pound spent, we got £2.48 worth of health gain back),¹ and similar gains have been shown in the US.²

The priority now is to raise value from the health pound or euro. Many of the most effective programmes are low cost—for example, the national service frameworks for coronary heart disease and diabetes in the UK, which identify and treat patients at high risk of vision loss, and programmes to help people with long term medical conditions such as diabetes and Parkinson’s disease.^{3 4 5}

There are new policies and incentives for enhanced primary care that can improve services by changed use of funding. Such changes include spending on new kinds of home care and telemedicine, which make it possible to treat more people out of hospital.⁶ Disease management for prevention and early detection could also contribute. The UK’s recent cancer reform strategy has made a strong case for increased investment in prevention, in part financed by reduced hospital admissions.⁷ We should put advances in communication technology that have revolutionised services such as air travel to better use, through locally driven investment programmes that create powerful incentives for fast results. Much more support is needed to make better use of experienced staff time in a service that must live without growth in staffing hours.

As the Organisation for Economic Cooperation and Development rightly stressed, "Ultimately increased efficiency may be the only way of reconciling rising demands for healthcare with public financing constraints," and it went on to conclude that "changing how health funding is spent rather than mere cost cutting is key to achieving better value."⁸

There are also the fiscal and labour market consequences of population aging with fewer young taxpayers or healthcare workers and more older service users.⁹ We have some years before this age effect reaches its full impact on health services—we should use the time to invest in redesigning services for older users who have a much greater requirement for social as well as health support. Within the UK there is a general recognition that services for frail elderly patients are inadequate.¹⁰

Health care in most developed countries is now a series of fragmented activities, a kind of feudal system where there is every interest in retaining liege control of the fragments. There will be no incentive to invest in a new kind of health service while the easy option of continued growth in high spending in the old one remains. Although fears have been raised that any cap could lead to increased private spending, a more effective public sector performance would counter this. Indeed, mixed health systems in the Netherlands and Australia live with lower shares of GDP than the UK.

In the longer term health spending may well rise as a share of GDP, but the challenge for the next five years is to redesign services for the future—and for that we need strong economic incentives at all points of responsibility in the health system.

Cite this as: BMJ 2008;337:a1040

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Competing interests: None declared.

References

1. Suhrcke M, McKee M, Sauto Arce R, Tsulova S, Mortensen J. The contribution of health to the economy in the European Union. Brussels: EU, 2005.
2. Nordhaus WD. The health of nations. The contribution of improved health to living standards. New Haven, CT: Yale University. 2002.
3. Department of Health. National service frameworks: coronary heart disease. London: DoH, 2000.
4. Cutler D, McClellan M. Is technological change in medicine worth it? Health Affairs 2001;20(5): 11-29.
5. Department of Health. National service framework for long term conditions. London: DoH, 2005.
6. Bosanquet N. European Nnations await revolution in health economy. Cerner Quarterly 2007;4:17-23.
7. Department of Health. Cancer reform strategy. London: Stationery Office, 2008.
8. Organisation for Economic Cooperation and Development. Health systems: measuring and improving performance. Paris: OECD, 2004:1-73.
9. OECD. Projecting OECD health and long-term care expenditures: what are the main drivers? Paris: OECD, 2006.
10. Healthcare Commission. State of healthcare. London HC, 2007.

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Should there be a ceiling on what percentage of GDP countries spend on health? No

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