As the politicians and economists look at the public finances and how to reduce the public debt, a few healthcare experts have been asking whether the NHS is financially viable as a fully funded public organisation over the next 50 years.
The key issue is that the ageing population will have a greater need for healthcare. The current UK population over 65 years is 17% and is expected to increase to 22% by 2025. That’s nearly a 30% increase and translating that into the current NHS budget of £110bn would need a significant sum to fund healthcare for this ageing population.
This will have a huge impact on public sector funding of social and care services and also state pensions.
In healthcare, even without such demographic pressure, the last 40 years have seen major increases due to other reasons and as a percentage of GDP it has risen from just over 2% to about 9%. As a share of total public spending, healthcare has seen an increase in the last 20 years from about 10% to about 18% of total public spending.
With the state of the public sector debt and no economic growth, the NHS has been trying to save £20bn for the last couple of years and this may have to continue for another 2-3 years.
However, even if we assume annual economic growth of 2% from about 2 years from now, even such efficiency savings will not help to plug the gap in funding more care.
So what’s the answer?
My premise is that by 2025 we will see major changes in how the NHS is funded since the state budget will not be able to fully fund it.
This is where politicians’ have been reluctant to be transparent with the public and start a real debate on how healthcare can be funded for fear of losing elections.
Due to this, I can see a few things happening to resolve the pressure on the public sector budget even though some may not be helpful to the NHS. Here are my predictions for the next few years.
- Further efficiency savings to tighten the NHS budget
- More deficits at hospitals and other providers and possible ‘bankruptcies’
- Subcontracting to the private sector hoping for a ‘silver bullet’
- Non funding of some services which have to be self paid
- Co-payment for certain services such as catering and selected drugs
- Further so called re-organisations to ‘save money’
All of these will not focus on the issue at hand and the best ways to deal with future funding.
What is required now is for the politicians to open the debate and come up with potential solutions, however unpalatable so that the people have a say in how their healthcare should be provided.