NHS trusts in England trusts ran up a record deficit of £2.45 billion in the year 2014-15, according to figures released on 20 May.
And the deficits are rising. The Government’s projections admit that health care costs will rise: from a little over £100 billion in 2015, they reckon, by a further £30 billion.
But funding will rise only £10 billion. The other £20 billion is supposed to come from “productivity savings.”
The tariff paid by the CCGs (groups of GPs) to NHS Trusts for each medical procedure is being arbitrarily cut by 2-3% each year. NHS Trusts can’t magic up “productivity” from nowhere, and so run into deficit rather than endanger patients.
There is an inbuilt tendency for health care costs to rise as a percentage of GDP as new medical procedures and drugs are developed and more people survive into old age.
NHS costs rose between 1949 and 1979 from 3.6% to 5% of GDP. After Thatcher took office in 1979 the budget was held at around 5% of GDP until 1999.
The NHS was blighted by low wages, long working hours, crumbling buildings, out-of-date-equipment, service shortages, and long waiting times.
Between 1999 and 2010 the Labour government raised funding to around 7.8% of GDP. The downside: it expanded the “internal market” and introduced PFI, which created a debt/contract overhang that continues to drain NHS resources.
Since 2010 funding levels have dropped back to 7% of GDP and towards 6%, which will be the lowest proportion on health care of the 34 richer countries in the OECD.
In both France and Germany (where the system is “social insurance” rather than direct free provision of health care) state spending on health care is around 8.5% of GDP, with total spending of 11% of GDP.
The situation in England is likely to become worse in the next four years for a number of reasons. Cuts in spending on the NHS are weighted towards the end of the five year cycle. 2015/16 and the current year, 2016/17, have relatively “generous” settlements. All the easy “productivity” savings have already been made, so the continued squeeze will bite harder. And after six years of a pay freeze, wages are rising a bit.
It would appear that in order to keep down the deficit figure this year, the Department of Health has cooked the books. Capital budgets have been raided (perhaps for £1 billion). NHS-owned land, buildings, and sometimes high-cost medical equipment, have been sold, and sometimes leased back, in one-off money savings measures which will make future funding crises worse.
The Chartered Institute of Public Finance and Accountancy suggests the NHS will exceed its budget by £10 billion a year by 2020, and it could be more.
The budget squeeze pushes us towards the blights of the 1980s and 90s — low wages, long working hours, crumbling buildings, out-of-date-equipment, shortages, long waiting times — and to worse.
It paves the way for the Tories to declare that a full health service is not “affordable”, and some treatments must be paid for. That process already started under Thatcher, with dentistry becoming a paid-for and largely non-NHS service, and long-term care for the elderly being pushed into the private sector.
It will expand, and push more and more health-care into paid-for provision.
There is nothing inevitable about that. There is nothing impossible about a society which, thanks to technology, needs much less of its total labour-time to produce its goods and many services, directing more of its effort into health care.
Total health-care spending is certain to rise if more of it is pushed into the market. The USA, with the most marketised, pay-on-the-nail health-care system of all the rich countries, also has the highest percentage of GDP spent on health care. Some of that is profit-seeking doctors and hospitals “selling” well-off patients much more “care” than is good for them, while worse-off patients are denied care.
The question is, will the extra spending be captured by private profiteering or by public services free at the point of need?
Will the rich be taxed to restore the National Health Service for us all, or will more and more of health care be taken over by profit-grabbing and denied to the worse-off?