The UK needs a new way to pay for health care - revisiting reports from the Tax Payers' Alliance

Given the recent outcry over the lack of NHS dental care, I wrote to John O'Connell the Chief Executive of the Tax Payers’ Alliance to ask his agreement to re-publish the articles below as I am very concerned that the knee jerk reaction to the dental care issue is likely to be a call for more funding of the NHS.


The Tax Payers' Alliance published an earlier report dated 22.01.15 entitled “We need to find a new way to pay for healthcare” but their latest report is dated 13.10.20 and includes an analysis of OECD statistics on health expenditure which can be found here:

An_analysis_of_OECD_statistics_on_health_expenditure_and_financing_v1.0
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Here is the summary of the 2020 report


Introduction The Organisation for Economic Co-operation and Development (OECD) annually publishes comparative health expenditure and financing statistics for member nations. Expressed in monetary terms and as a percentage of gross domestic product (GDP) or healthcare expenditure, they are often referenced when comparing the performance and medical outcomes of different international healthcare systems.


In order to make international comparisons more useful, the OECD, in co-operation with the World Health Organisation (WHO) and Eurostat, developed a framework to ensure that the data it publishes is prepared by member states on a consistent basis. The System of Health Accounts (SHA) specifies the methodology by which health expenditure is to be recorded. The current guidance is SHA 2011 which stipulates how expenditure is to be classified. This has generated a global standard of health accounting.


As UK health expenditure continues to grow,[1] with announcements of nominal and real terms increases to health budgets becoming an annual occurrence, it heightens the need to compare health expenditure with international partners to ensure taxpayers’ money is being spent efficiently.


The TaxPayers’ Alliance has shown that numerous efficiencies can be found in the UK, such as better utilisation of scanning equipment by National Health Service (NHS) Trusts and embracing app-based technology.[2],[3]


Healthcare expenditure is likely to grow in importance, given the coronavirus pandemic and the fact that developed nations across the world face the issue of lower replacement ratios; two-fifths of national health spending is already spent on those aged over 65 in the UK.[4]


The sums at stake are already enormous: the Department of Health and Social Care in England planned to spend £139.8 billion in 2020-21, more than double the education budget.[5] As announced by the health and social care secretary, Rt Hon Matt Hancock MP, NHS funding will rise further by £33.9 billion in 2024.[6]


This rise alone is more than double the planned Department for International Development budget in 2020-21.[7] It is therefore crucial that we can compare health expenditure within similar countries to ensure spending efficacy. Furthermore, public debate on health policy is littered with international comparisons of spending as a proportion of GDP. But all too often commentators do not compare like with like; it is important to understand the composition of the OECD figures to facilitate better-informed debate.


In tandem with the debate regarding health expenditure, there must be another in regard to its effect on health outcomes. Spending never-ending sums on healthcare is pointless if it is having no real impact on the outcomes patients receive. While levels of expenditure will play an important role in this paper, so too will the impact on levels of service provision, since it cannot be automatically assumed that spending more on health equates to better results for patients.

This research will analyse the health expenditure and financing of five countries that serve as appropriate comparators to the United Kingdom. These are France, Germany, Ireland, Netherlands and Sweden. These countries have been chosen due to the diverse nature of their health financing, and consistency of data provided to the OECD.


This makes them suitable comparators for the UK because consistent data allows for a range of key comparisons, while diversity of health financing ensures that broader conclusions can be drawn. The analysis will contrast how much was spent on health in the respective countries, alongside spending on different functions of healthcare. The paper shall also provide a breakdown of healthcare providers, illustrating the proportions of funding each receives. Finally, it will show how health expenditure was financed through numerous financing schemes in each country.


The 2017 data was provided by individual countries in SHA 2011 format for the OECD. This will be used to analyse how healthcare was financed and the types of health systems used by the selected countries. This will provide a breakdown of how much health expenditure was used by each of the four major financing schemes, illustrating the differences in financing models between government-run and insurance-based systems. This will explore concerns that some may have regarding insurance-based systems being controlled by private financing.


The paper then addresses comparative levels of expenditure, using different measurements. This has been done to reveal any trends between certain types of healthcare system and higher or lower levels of household out-of-pocket expenditure. As primary financing schemes are where most health spending occurs, it will be instructive to explore how per person spending on out-of-pocket expenditure varies under different primary financing schemes. This is because it is indicative of whether a health system is providing healthcare goods and services to its patients.


Using the primary financing scheme information, the paper will move on to analysing how each of the selected countries applies its spending across the range of health functions provided by the OECD. This will show any areas where countries or systems prioritise certain areas of health expenditure, as well as any efficiencies in non-healthcare related spending, such as administration and procurement of medical goods.


After contrasting spending via function, the study will analyse expenditure through healthcare providers, breaking them down by type and (when the data permits) whether they are in the public or private sector. This may be instructive, since government scheme health systems have typically been criticised for their lack of resources. By comparing them to insurance-based systems a conclusion can be drawn as to whether one model of healthcare or country is better at providing facilities than another.


Finally, the paper will address health expenditure impact on health outcomes. The base level data used in previous sections will help contribute to this section. Using this data will help to provide the platform to better evaluate whether healthcare outcomes are simply influenced by the amount of spending by a country. This is crucial, as improving health outcomes should be the aim of any health system, rather than increasing spending for the sake of it. Correlations between spending and health outcomes will be drawn out in this section.


https://www.taxpayersalliance.com/an_analysis_of_oecd_statistics_on_health_expenditure_and_financing


This article in pdf can be downloaded here:

An analysis of OECD statistics on health expenditure and financing - Tax Payers' Alliance
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Download • 47KB

The article dated 22.01.15 can also be dowloaded here in pdf:

We need to find a new way to pay for healthcare – TaxPayers’ Alliance 22.01.15
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Download PDF • 44KB




[1] Cooper, J., Healthcare expenditure, UK Health Accounts: 2017, Office for National Statistics, 25 April 2019,

www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthcaresystem/bulletins/ukhealthaccounts/2017,

(accessed 9 March 2020)

[2] Wild, A., NHS Machines: the utilisation of high-value capital equipment at NHS Trusts, TaxPayers’ Alliance, 2016, p.2.

[3] Ramanauskas, B., Embracing technology in health and social care, TaxPayers’ Alliance, 2019, p.3.

[4] Robineau, D., Ageing Britain: two-fifths of NHS budget is spent on over-65s, The Guardian, 1 February 2016,

www.theguardian.com/society/2016/feb/01/ageing-britain-two-fifths-nhs-budget-spent-over-65s, (accessed 12

March 2020).

[5] HM Treasury, Budget 2020, 12 March 2020, www.gov.uk/government/publications/budget-2020-documents/budget-2020, (accessed 12 May 2020).

[6] HM Government, NHS funding bill enters parliament, 15 January 2020, www.gov.uk/government/news/nhs-funding-bill-enters-parliament, (accessed 12 June 2020).

[7] HM Treasury, Budget 2020, 12 March 2020, www.gov.uk/government/publications/budget-2020-documents/budget-2020, (accessed 12 May 2020).





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