Government Health Spending Growth Outstrips Private Sector Growth in Both the UK and the US

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By Linda Gorman,

from NCPA,

Here are some data suggesting that health spending increases are, as theory suggests, difficult for the public sector to control. If true, a long run strategy that seeks to control expenditures by increasing the fraction of health spending under government control is more likely to increase expenditures than reduce them.

The two charts below show different measures of inflation-adjusted spending by the public and private sectors in the United Kingdom and the United States.

The first chart is from the Nuffield Trust for Research and Studies in Health Services, a British foundation devoted to “evidence-based research and policy analysis for improving health care in the UK.” It shows that inflation-adjusted UK public spending on health has increased by more than 200 percent since 1997. Inflation-adjusted public spending increased by 68 percent between 2000 and 2012. Private spending increased by 26 percent. Over the same time period, the population of the United Kingdom rose from about 59 million to 64 million, an increase of almost 7 percent.

The next chart shows the growth in US public and private health consumption expenditures. US public spending rose more slowly than in the UK but more rapidly than in the US private sector. From 2000 to 2012, inflation-adjusted spending rose 67 percent in the public sector and 44.5 percent in the private sector. Expenditure growth was slower even though the US population grew by 27.3 million people or 9.7 percent, a larger percentage growth rate than in the UK.

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