Estimating the health benefits of increasing and reallocating expenditure on the National Health Service in England (with appendices)

<p dir="ltr">In this paper, we address some of the key questions for health policy in England: i) can the NHS be regarded as underfunded; ii) what increase in overall NHS expenditure might be justified, and iii) how resources should be allocated across the NHS.</p><p dir="ltr">Using data from local areas of the NHS in England in 2016/17, and an econometric analysis using instrumental variables to estimate causal effects of health expenditures on health outcomes, we estimate the non-marginal effects of changes in total NHS expenditure based on a Cobb-Douglas production function and reflect the heterogeneity in effect sizes by local area using unconditional quantile regression.</p><p dir="ltr">Based on UK government estimates of the social value of health, we find that an increase in expenditure of £1,500 to £2,000 per capita would be justified by the scale of health benefits that would result. We also find that a statistically significant effect on overall health is possible following a re-allocation of existing resources.</p>