01 December 2017

2016/17 Rybczynski Prize Essay

Health spending: it’s not just about ageing

Mirko Licchetta, Office for Budget Responsibility
Michal Stelmach, Office for Budget Responsibility

This paper summarises the key findings of a recent review that the authors undertook at the Office for Budget Responsibility (OBR) of the latest evidence on demographic and non-demographic drivers of health spending in the UK.1 They find that beyond income and demography, there are important non-demographic drivers (e.g. increasing relative health care costs and technological advances) that have generated further upward pressures on health spending. Even apparently cost-saving developments – such as the use of stents as an alternative to open heart surgery – have generated upward pressure as more patients have been treated. Factoring in these other cost pressures had significant implications for the OBR’s long-term fiscal projections.