How much should we spend on health care?

For a tax-funded health service such as the NHS, how much is spent in total is a crucial (and necessary) decision which precedes and determines the consumption of health care by individuals. Determining total spending in private markets is not a particularly important (or necessarily interesting) issue as it is merely the sum of all the private spending decisions of individual consumers in the market. However, economists would argue there are parallels between these (collective) public and (individual) private decisions; both involve balancing costs and benefits, and trade offs with other ways of spending limited budgets.

Economists would further suggest a decision rule to identify how much to spend on health care (or anything else for that matter); continue increasing spending on health care until the next pound yields greater benefit from spending on some other, non-health, care activity. Although NICE operate a version of this decision rule when assessing the cost effectiveness of individual health technologies, its wider application to decide on total health spending (versus other beneficial uses of society's scarce resources) has prohibitive data implications and requires agreement on the value of the benefits side of the calculation.

Given that a decision has to be made however, in practice the decision process falls within the political sphere, informed, up to a point, by data on the determinants of spending (eg population projections), international benchmarking and the exigencies of prevailing macroeconomic circumstances.