Many economics teachers bring the economics of health care into their teaching at an early stage of a new course. It is a terrific issue to look at when considering the basic economic problem of unlimited wants and limited means, the factors of production used in providing health care and also the issues of opportunity cost and key decisions about who gets the care they need and how best to fund appropriate healthcare for the population.
The NHS originally launched with a budget of £437m (approximately £9bn at today’s value) and was designed to offer free-at-the-point-of-delivery, acute and emergency medical care for everyone – regardless of their status or income. The government spent £113bn on the NHS in England in 2014/15; a 1.8% increase in real terms on the 2013/14 expenditure.
Total health expenditure in the UK in 2012 amounted to 9.3% of GDP, of which 7.8% was government spending. The UK’s government spending as a percentage of GDP ranked 9th out of the 30 OECD countries with available data for 2012.
Each year data is produced on the base cost of a range of treatments provided by the NHS. The annual heat care report from Benenden Health has prompted a lot of media interest. They found that the majority of people vastly under-estimate the resource cost of providing different treatments. Drawing on data from this report and that made available by the NHS, I have produced a table below of a selection of treatments.
Examples of base cost for a range of treatments
Base cost – this is usually excluding the costs of pre-treatment, GP appointments, post-procedure care and follow-up care.
Costs are higher for patients who need an extended stay in hospital
Base costs for 2013-14 (costs have been rounded up for ease of use)
- Planned caesarean-section in NHS hospital £2,400
- Natural birth in NHS hospital £1,800
- Abdominal hernia repairs £2,300
- Hip replacement £8,900
- Liver transplant £70,000
- Gastric (stomach) by-pass £5,000
- One round of IVF treatment £6,000
- Bone marrow transplant £70,000
- Heart transplant £43,000
- Cochlear Implant £17,000
- Kidney transplant from heart-beating donor £15,000
- Kidney transplant from non-heart-beating donor £13,600
- Plasma exchanges (20 or more) £9,700
There are many options for teaching this.
A matching exercise to see if students can match the treatment with the cost
A discussion based around the concept of opportunity cost - for example a student could have a fixed budget of £200,000 and be asked to consider how that budget might be allocated to the treatments listed, justifying their rationale.
The data can form the basis for independent research on how costs can best be controlled in the NHS, whether or not people should expect to have most treatments available free at the point of clinical need. Choose an ambitious title for a piece of extended writing!
Suggestions for further reading and research
Sustainability of the National Health Service as a Public Service Free at the Point of Need (July 2015) http://researchbriefings.parliament.uk/ResearchBri...
2015 Benenden Health Care Reporthttps://www.benenden.co.uk/media/1787810/Benenden-...
NHS Reference Costs for 2013-14https://www.gov.uk/government/publications/nhs-ref...
Articles on the NHS from the Guardian http://www.theguardian.com/society/nhs
Guardian: The Secret Doctor: people would use the NHS less if they knew the true price tags http://www.theguardian.com/commentisfree/2015/aug/...
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