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UK healthcare spending reaches £144.5 billion in 2012, up 1.9%

The latest ONS analysis looks at healthcare spending

The latest ONS analysis looks at healthcare spending in the UK and shows that spending in 2012 was £144.5 billion, up 1.9% since 2011. There are many reasons why healthcare spending is so high and why in the UK there has been continual growth over recent years. For instance, the population of the UK is ageing and older people need more treatment, also new drugs and technologies are expensive to research and develop. Overall, healthcare represented around a third of government spending today.  However, compared with the rest of the G7 countries, UK healthcare spending as a percentage of GDP is actually relatively low at 9.2%.

How much did we spend on health?

In this analysis, healthcare includes spending by: the department of health, military, charities and households. In 2012, the UK spent a total of £144.5 billion on healthcare, three times as much as in 1997 when it was £54.6 billion. This rapid increase mostly occurred between 1997 and 2009 when the annual average growth was 8%. However, since the economic downturn there has been a slow down in healthcare spending because government budgets have been under pressure. The annual average annual growth after the economic downturn (2009-12) has been 1.6%

Figure 1: Total healthcare expenditure

UK, 1997-2012

Figure 1: Total healthcare expenditure
Source: Office for National Statistics

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How much of GDP is healthcare spending?

In 2012, healthcare spending made up nearly a tenth (9.2%) of GDP, the same proportion as in 2011. Since the economic downturn there has been an increase in healthcare spending as a share of GDP, because healthcare spending rose faster than GDP in 2008 and 2009.  The largest increases were therefore in 2008 and 2009 at 0.4 percentage points and 0.9 percentage points. Healthcare spending as a share of GDP is nearly a third higher than it was in 1997 (6.5%).

There have also been increases in healthcare spending per capita in the UK, rising from £937 in 1997 to £2268 in 2012. The annual average growth per capita was 7.4% from 1997 to 2009, followed by the much lower average growth of 0.8% from 2009 to 2012.

How does the UK compare to other countries?

As a general trend, health spending as a share of GDP has increased for most countries over the past 50 years (OECD), although there have been a few changes in recent years. For instance, healthcare spending as a share of GDP rose sharply in most OECD countries in 2008 and 2009 because GDP fell while health spending continued to rise. Since 2009, healthcare spending as a percentage of GDP has decreased or remained broadly flat because of cuts to public healthcare spending, and decreases in private healthcare spending. Overall in 2012, the UK spent less on healthcare as a percentage of GDP than all other G7 countries, aside from Italy.

Who is paying for these services?

In 2012, public healthcare made up the largest proportion of UK healthcare spending at 84% while private healthcare spending made up 16%. Public spending includes all government spending, and totalled £121.3 billion in 2012. Public spending is nearly three times as high as it was in 1997 (£43.9 billion), and this rapid increase has been driven by the annual average growth of 8.3% from 1997-2009. After the economic downturn, growth dropped to an annual average of 1.9% from 2009-12.

On the other hand, private healthcare growth has been much slower in recent years. Private healthcare spending includes charities, household spending, private health insurance and private sector capital expenditure and totalled £23.2 billion in 2012. Private healthcare more than doubled from 1997-2008, from £10.7 billion to £23.8 billion, with an average annual growth rate of 7.5%. After the economic downturn, private healthcare expenditure fell by 2.8% between 2008 and 2012.

How did the volume of health spending compare with other goods and services?

Private household spending has formed the majority of private healthcare spending between 1997 and 2012 and was on an upward trend until 2008. However, household spending has declined or flat-lined in many G7 countries, including the UK, since the economic downturn.

Private healthcare spending grew around 50% between 1997 and 2008, compared with a doubling in recreation and culture services consumption and a trebling of clothing and footwear consumption.  Since 2008, consumption of health has remained broadly flat, along with recreation, while clothing and footwear consumption continued to rise strongly1.

Figure 2: Volume of household consumption indices

UK, 1997 - 2012

Figure 2: Volume of household consumption indices
Source: Office for National Statistics

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Where can I find out more about healthcare spending?

These statistics were analysed by the Public Service Productivity team at ONS. The analysis was based largely on data from ONS and the Department of Health. If you would like to find out more about healthcare spending, you can read the release, view the infographic, or visit the health page. If you have any comments or suggestions, we would like to hear them. Please email us at: chris.s.payne@ons.gsi.gov.uk.

Notes:

1 Private healthcare spending trends may be caused by either change in price or in the volume of consumption. This data cancels out price changes, and just focuses on volume. 

Categories: Government, Central and Local Government, Public Service Productivity, Health and Social Care, Health Care System, Health Care Personnel, Finance and Performance
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