How is the NHS financed

Health system England and Germany in comparison

11.09.2017

Which is better, the British NHS with their Beveridge model or the German Bismarck model?

With the referendum on Brexit since June 2016, Great Britain has been facing major political and economic challenges with enormous societal consequences. Banks, companies and even EU citizens who work in Great Britain are unsettled and some of them are leaving the country. In addition, as a financial center, London is losing not only the European Banking Authority (EBA) but also the European Medicines Authority (EMA). As a result, London is becoming less attractive for companies in the healthcare sector.

So what about the health system in England?

There are currently 65.6 million people in the United Kingdom (England, Scotland, Wales and Northern Ireland). Among them there are around 236,836 licensed doctors, which means there are currently 277 British doctors for every doctor.1,2 The total expenditure of the British health system in 2015 amounted to 251.2 billion euros (9.9% of GDP), corresponding to around 3856.9 euros per inhabitant for the population at the time.3 In Germany there are approx. 378,607 doctors with a population of approx. 82.2 million people, so that we come to approx. 217 inhabitants / doctor per doctor.4,5 Here the total expenditure in 2015 was 344.2 billion euros (11.3% of GDP), which means that we spent 4187.4 euros per inhabitant.6

Thus, the UK's health care system generates 7.9% fewer costs than the German one, and if the population figures are extrapolated, it is approx. 27.2 billion euros less. This corresponds to almost either 9% of the federal budget, the entire annual expenditure of the Federal Ministry of Transport and Digital Infrastructure or the entire personnel expenditure of the federal government in 2015.7

How is the UK healthcare system organized?

The British health system is based on the basic idea of ​​the welfare state of British MP William Beveridge. As a result, public health care for the entire population is financed by taxes, so almost all medical services are free for all residents. Medicines, treatments by an optician and dental services are excluded. However, there are diseases that can be treated free of charge with medication, such as diabetes mellitus, hypothyroidism or tumor diseases.11 The German health system, in turn, is based on Bismarck's model of social insurance, in which regular contributions to health insurance are to be paid depending on income. These health insurances then reimburse benefits that are insured in the event of illness.

Since it was founded in 1948, the National Health Service (NHS) has represented the public, state health system. The majority of the health care staff is employed by it (e.g. doctors, nurses or technical staff) and has over 1.5 million employees.11This makes it one of the five largest employers in the world.12

In Great Britain, unlike in Germany, there is no statutory health insurance. The NHS is responsible for billing the costs of the healthcare system. He is therefore also responsible for the cost structure. Treatment outside of the NHS is possible, but requires private health insurance or independent payment of costs. In 2015, 79.5% of healthcare spending in the UK was funded by the NHS, i.e. the state, while the remaining 20.5% was paid privately.3

The structure of the outpatient and clinical system is also different in Great Britain. General practitioners take care of general practitioners and can refer patients to specialists. However, in addition to inpatient care, outpatient specialist care only takes place in clinics. Patients only have the opportunity to visit clinics directly in an emergency. Otherwise, the system will always first have to consult a general practitioner, who will decide how to proceed.

What is the reason for the difference in costs of 27.2 billion euros?

First of all, one has to consider the lower number of doctors in Great Britain, as this is significantly lower at 3.6 doctors per 1000 inhabitants than in Germany with 4.6 doctors per 1000 inhabitants. Extrapolated, the additional financial burden of 82,200 doctors for Great Britain, for example (too high) estimated average salary of € 100,000 / year, would be € 8.2 billion. Accordingly, not enough to adequately explain the difference.

Furthermore, the assumption that the UK would need such a large number of additional doctors in order to be able to continue its system in the desired quality is unrealistic. After all, life expectancy in 2015 was 82 years and was thus higher than that of Germany at only 81 years.8 This indicates that the health system could possibly not only be cheaper but also better.

Last but not least, one possible main reason is the significant difference in the age structure of the two countries. The UK population had a median age of 40.2 in 2015, meaning 50% of the population was younger and 50% over 40.2. The population of Germany, on the other hand, had a median age of 45.9 years. Health care expenditure increases more and more with increasing age, as diseases manifest more frequently in old age and one is more susceptible to disturbances. Not only does cell growth or cell regeneration decrease on a microscopic level, but our organ function also deteriorates macroscopically. Bone fractures and accompanying injuries also increase with increasing immobility, a weakened musculoskeletal system and an increased tendency to fall. All in all, this leads to more frequent necessary therapies with more frequent hospital stays, combined with considerably higher costs.

For example, a study in 2004 showed that around 33% of the health costs of an entire life in their study cohort were incurred in middle age and 50% of the costs in senior age.9

Conclusion

First of all, it must be said that we used a greatly simplified model for the calculation and argumentation and that we were only able to consider a few influencing factors in this article. Although this leads to inaccuracies, it is sufficient overall for a rough overview of these health systems.

Ultimately, we believe that the current cost advantage of the UK health care system is put into perspective when looking at the median age of the population, as this is probably a major major factor in the cost differential. Although the health systems of Germany and Great Britain are fundamentally different, they both offer globally recognized high quality and face the same challenges in the future: Constantly rising costs with insufficient resources.

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