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J R Soc Med. 2001 September; 94(9): 462–465.
PMCID: PMC1282188

Healthcare financing for the under-served: UK

John H James, BA MHSM

The National Health Service (NHS), established in 1948, is mainly funded from taxation and largely free at the point of use. Anyone resident in the UK is entitled to use it.

The overall level of NHS spending is determined by the Government; and for most of its history, tight control has been exercised, resulting in spending that is lower relative to gross domestic product (GDP) than in most OECD countries. For many years NHS spending was within the range 5.5-6.2% of GDP. In March 1999 the Government committed itself to increase spending over the following five years to the average for the European Union. It is too early to assess what impact this will have on availability of healthcare, but the commitment has been accompanied by ambitious targets to reduce waiting times for treatment, to improve the responsiveness of services and to enhance the patient experience.

Most NHS spending has for the past thirty or so years been distributed by population-based allocations, adjusted for factors considered to affect the need for and costs of healthcare. The allocations are spent locally on the provision of services. Additional funding streams have been used either because Government has wanted to put its weight behind the development of a specific service (hospice funding at one stage fell into this category) or because the geographical distribution of a health problem was too skewed for any formula (AIDS treatment and care fell consistently into this category). Responsibility for spending both general and specific allocations has rested with local health authorities, which may loosely be seen as geographically specific health maintenance organizations.

In the current year the UK Government plans to spend some £44 billion (£1[bumpy equals, equals]US$ 1.4) on health and healthcare on the 50 million population of England alone. About 1% of that total will be spent within an average-sized health authority.

There are three other important sources of funding. First, about 10 million people in the UK are covered by private insurance, either employer-based or privately purchased, most of them of working age together with their families. Collectively this equates to about 1% of GDP. It mainly purchases elective treatment. Secondly, older people requiring both clinical and social care support, whether in their own home or in a residential or nursing-home setting, may be required to meet the social care part of the costs from their own resources. Thirdly, some aspects of healthcare have been relatively successful in attracting capital, revenue or (unpaid) volunteer help. Palliative care and AIDS/HIV treatment come into this category.


Information about total spending on palliative care is not routinely collected in the UK. This is partly because, despite the best endeavours of colleagues with an academic or clinical interest in palliative care, it has not generally seemed necessary for managers to know what services are being provided, to whom, or at what cost.

Parts of the picture are available. We do know roughly how much we are spending on specialist palliative care services (particularly hospice care) and on home nursing (particularly through the specialist palliative cancer care nurses provided through the Macmillan Nursing Scheme), but this is only part of the picture. My local acute hospitals have developed specialist expertise in pain management which will, in the main, be palliative in nature. A good general practitioner or district nurse may, in an unsung way, be doing just the same for a home patient or a nursing or residential home resident. But these areas of activity are impossible to quantify, to cost or to evaluate.

The estimated expenditure of the health authority in 2000-2001 was about £2½ million on identifiable palliative care services (0.6% of the total budget), part of which is for AIDS patients. An estimated 3000 people will use palliative care services in any one year.

We know, however, that palliative care is not equitably available to all categories of patient who could benefit. Local studies1 have shown that use of our respite or hospice services is almost confined to cancer or AIDS patients despite the abundant evidence that significant numbers of patients with other conditions could also benefit2. In all probability this is partly due to service providers' conservatism but it may also reflect ignorance on the part of referring clinicians. Whatever the reason, it indicates the existence of an ‘under-served’ patient group. A second such indication is that a sizeable proportion of primary care doctors, when last surveyed, had no referrals whatever to palliative care services. Their entire patient populations were therefore, for no good reason, excluded. Two such doctors said they did not know what palliative care services were.

Nationally, palliative care has attracted little ministerial interest or support. In the 1980s hospice care briefly claimed the attention of the then Minister for Health; in 1987 all authorities were required3 to draw up strategies and for several years from 1990 there was earmarked funding for hospices. However, the funding was soon subsumed in general allocations, while the strategies, where they had been completed, which was not everywhere, largely mouldered on dusty shelves4. Other priorities took centre stage.

To the extent that a continued focus has been maintained on this area, considerable credit has to go to a small band of individuals and organizations. Among the latter, the most important was the National Council for Hospice and Specialist Palliative Care, which in 1995 issued all health authorities with guidance on specialist palliative care.

Ignorance therefore is not an excuse. But political priority will be necessary if it is not to be a convenient figleaf. In this context the Government's National Service Framework for Elderly People, published in March 2001, makes mention of palliative care services5 but lays down no specific requirements.


AIDS-related funding has been separate from mainstream allocations since it began in the mid-1980s. All health authorities received funding for preventive work. This was used to support national programmes to heighten HIV/AIDS awareness, to improve understanding of the condition and how to avoid infection, as well as to support services such as needle exchanges and condom distribution which could directly reduce transmission risks, and genitourinary medicine facilities which might indirectly help. While there has been continuing scepticism (partly justified) about how well the prevention resources have been used, it is a fact that transmission of HIV within the UK has been low by European standards. Indeed, much of the growth in HIV prevalence in the UK now relates to infections acquired overseas.

AIDS treatment and care funding has always been much greater than funding for prevention work. Initially it was based on crude costing of hospital bed days and even less sophisticated modelling of future caseload. Money went primarily to London, which has consistently accounted for over two-thirds of the known cases and has treated many patients from elsewhere. Money was used to provide facilities principally in a handful of hospitals that acquired national reputations for their work. Often HIV-positive people moved to live nearer these hospitals and one or two other facilities. At that stage—say 1985 to 1995—most AIDS cases were among homosexual men or intravenous drug abusers, both for different reasons preferring to live in the capital city. Excellent support networks grew up; there was powerful volunteer support and a strong service framework. The difficulties of predicting accurately what the true cost of the service ought to be led to perceptions in many quarters that people being treated for HIV/AIDS received gold/plated services compared to others with terminal conditions, and to the belief in other parts of the country that London was using its (unfair, it was alleged) share of total resources to subsidize other services.

During that initial 10 years it was very clear that those who had the misfortune to be diagnosed HIV-positive or to develop AIDS in the UK would have ready access to treatment or palliative care. There has never been an equivalent of the beggars on the streets of New York apparently unable to access treatment because they fell outside the insurance framework. Treatment as required, in hospital, respite or palliative care in one of a number of settings (the best known the London Lighthouse), a range of support organizations both national and niche, and ready access to such balms as complementary medicine or counselling—all were available. Broadly speaking, survival rates improved for all categories at much the same slow rates, and a stable pattern of services emerged.


Two more or less simultaneous events changed the whole picture. First, the government of the day decided that the time had arrived to reduce AIDS treatment and care funding, on the basis that the prevalence was lower than had been expected and that inpatient lengths of stay had shortened. Undoubtedly, too, the allegations of a Rolls-Royce service had struck home. A 7½% cut in funding was implemented in 1996-1997. The second event was the publication of findings, at an HIV conference in Vancouver in 1996, in respect of the benefits of combination therapy that led to an unavoidable case to make it available to all NHS patients likely to benefit. Not only was the overall funding lower, but the costs of drugs had to be paid direct to the manufacturers, which meant that the money was no longer available towards the costs of the hospitals or support organizations. Wholesale cutbacks in other areas had to be made to meet the drug costs. In London alone the costs of combination therapy rose from £14 million to £38 million between 1995-1996 and 1997-1998. In the latter year the 7½% cut was reinstated, which meant in effect that the additional £24 million came from an unchanged overall budget and by 1997-1998 comprised 25% of that budget. In 2000-2001 the cost in London had risen to an estimated £77 million.

The shortfall was dealt with across London as a whole by heavy pruning of the non-statutory sector (the London Lighthouse6) and by recognizing and, so far as possible, eliminating cross-subsidy within the main hospitals. It was true that inpatient treatment costs had declined substantially over the years. Several of the main hospital providers had not, however, been able to secure alternative inpatient flows, and hence income streams, to compensate. Nor, in any event, would purchasers have been willing to pay for these beds at what were seen as inflated prices.

As the situation developed, however, evidence emerged that access to services, and in particular combination therapy, was no longer equitable. New groups of the under-served were surfacing. Although all specialist HIV treatment service providers signed up to standard guidelines governing admission to combination therapy regimens, it became clear that the percentages of eligible patients receiving combination therapy varied considerably. In broad terms the percentage grew much more rapidly in centres in west and north-east London than in the centres in south-east and north-central London. Two factors were at work. First, the clientele of the higher prescribing centres were in the main articulate and well-informed, well able to ensure that their needs were met. Secondly, on the whole, their local health authorities found the resources more readily than their counterparts elsewhere in London. Those counterparts believed, with some justification, that some parts of London had done better out of AIDS funding than they had, but also pointed out that HIV prevalence was growing much more quickly in south and east London than elsewhere. As Table 1 shows, the percentage of all patients on triple (or more) therapies grew overall between 1999 and 2000, but remained uneven.

Table 1
Numbers of HIV-positive patients and percentage receiving triple (or more) combination therapy in 1999 and 2000 at each specific provider in London*

In practice there was a more disturbing undertone. The substantial growth in the number of cases in south and east London was in the main influenced by an influx of immigrants—including asylum-seekers and refugees as well as people from the Commonwealth with residence entitlements—bringing HIV infections with them, mainly though not exclusively from sub-Saharan Africa. These groups were characterized by being more likely to be whole families, being socially disadvantaged and isolated, being much less well aware of the healthcare to which they were entitled, and being more likely to present only when symptomatic. They were also likely to find intimidating a service that had grown up principally to meet the needs of white middle-class males.

We had therefore, arguably for the first time, an AIDS treatment service from which a significant group were, intentionally or not, marginalized. Extricating ourselves from this situation by readdressing funding levels and means of distribution has not been straightforward, nor wholly successful. The overall funding is now higher in recognition of drug costs, and allocations now use the most recent data on the distribution of caseload to give money to health authorities of residence, not to those in which people have begun treatment. This system offers the potential for money to be invested in more local and more appropriate services in the areas where prevalence is increasing, but this is a slow process and impatience remains7.


There are grounds for concern that the marginalization in the UK of sub-Saharan African people living with HIV and AIDS may continue in subtler ways and may extend to other population groups. The UK, like all developed countries, is faced with a considerable increase in the numbers of actual or potential asylum-seekers and refugees, and seeks to restrict entry to ‘genuine’ claimants.

In the course of 1999, 71 160 individuals sought asylum. In that year 7080 were granted asylum, 2100 were given extended leave to remain and 7730 were refused. The net result was that 54 000 more cases were waiting for decisions at the end of the year than at the beginning. In the first nine months of 2000 a further 55 995 individuals arrived, and 75 680 in all were awaiting decisions on their applications8. Meanwhile, the needs both of applicants and of those allowed to remain have to be met. Preponderantly, these groups had gravitated to London and areas of the South-east, whose capacity to provide support was rapidly being overwhelmed. The Government has therefore been forced simultaneously to try to stem the flood and to disperse those granted and those seeking asylum more widely across the country.

The Immigration and Asylum Act 1999 introduced new arrangements designed to facilitate dispersion. A National Asylum Support Service will support all new asylum-seekers largely through benefits in kind (vouchers) with no access to social security benefits and a small cash allowance for incidental expenses. Dispersal away from the South-east is an explicit objective. Guidance on how to achieve this followed9.

The objectives are well-intentioned, and from a wider perspective there is no valid alternative. The Government has just published Full and Equal Citizens: a Strategy for the Integration of Refugees into the United Kingdom10 which aims ‘to include refugees as equal members of society [and] to help refugees develop their potential and contribute to the cultural and economic life of the country’. For some refugees these worthwhile objectives will require additional support measures. There are, however, grounds for concern. Areas of the country without experience of accommodating ethnic minorities, still less refugees and asylum-seekers, may struggle to provide a supporting infrastructure. Informal support networks will not be in place, as they are in London. Refugees and asylum-seekers may not understand how to use healthcare services, may be fearful of revealing health problems, and may only present in crisis. If it then transpires that they are HIV-positive or have developed AIDS, they may present to a service with much less experience of treatment than the big London centres. Those who have entered illegally, even those living in London, will have other reasons for remaining hidden for as long as possible.

By contrast, asylum-seekers who are able to enter treatment at a centre with greater experience would be supported in an application for extended leave to remain, on the grounds that it would be impossible for them to continue treatment if they were returned to their home country. Perversely, therefore, HIV-positive asylum seekers may be avoiding (or ignorant of) a service that could actually secure their ambition of remaining in Britain.


The National Health Service has a respected tradition of providing, largely without charge, services that are accessible to all residents of the UK. Those services will on occasions struggle to respond to rapid changes in demand and some groups will by accident or default not receive equitable access. The examples discussed here illustrate how this can come about. The variations in access to palliative care described in the first section arise more from ignorance and the slow acceptance of the need for change than from external change in demand. Each of these deficiencies should serve as a warning of the dangers of complacency. A universal service will not guarantee universal and equitable access.


1. Higginson I, Bush R, Jenkins P, Collins M. Commissioning Specialist Palliative Care Services. London: Kensington & Chelsea and Westminster Health Commissioning Agency, 1994
2. Cartwright A. Change in life and care in the year before death 1969-87. J Publ Health Med 1991;13: 81-7 [PubMed]
3. Health Circular HC (87)4. Health Services Development Terminal Care. London: Department of Health, 1987
4. Clark D, Malson H, Small N, Mallett K, Neale B, Heather P. Half full or half empty? The impact of health reform on palliative care services in the UK. Policy, ethics, evidence. In: Clark, D, Hockley, J, Ahmedsai, S, eds. New Themes in Palliative Care. Buckingham: Open University Press, 1997: 60-74
5. Department of Health. National Service Framework for Older People. London: DoH, 2001
6. James J. Palliative care for non-cancer patients: a purchaser's perspective. In: Addington-Hall J, Higginson I, eds. Palliative Care for Non-Cancer Patients. Oxford: Oxford University Press, 2001: 217-26
7. Cosgrove P, Thomson R, Bellis M. Equitable-strife. Health Serv J 4 January 2001: 21
8. Refugee Council. Asylum Statistics: September 2000. London: Refugee Council, 2000
9. Audit Commission. Another Country: Implementing Dispersal under the Immigration and Asylum Act. London: Audit Commission, 1999
10. Home Office. Full and Equal Citizens. London: Home Office, 2000

Articles from Journal of the Royal Society of Medicine are provided here courtesy of Royal Society of Medicine Press