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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is chief executive of the Office of Health Economics, a research organisation
The much-anticipated NHS 10-year plan is expected within weeks. Prevention will be at its core — but it’s almost certain we will get the funding part wrong.
That’s not this Labour government’s fault. Nor can you blame its Conservative predecessors. This goes beyond political scapegoats: the real diagnosis is short-sightedness, both in ourselves and in public policy.
There is a fundamental economic principle that explains why we act against our future self-interests. It’s why we smoke, or eat too much processed food, or order a delivery meal instead of cooking: it gives us pleasure in the moment; it might be all we can afford right now; it saves time. Economists call this a “present bias”, prioritising smaller gratification today over much larger but longer-term gains.
It’s the same reason governments don’t spend enough on prevention, despite overwhelming evidence that it is at least three to four times more cost-effective than treatment — even more so for some interventions like vaccinations. The problem is that it typically costs a lot now but the benefits only accrue much later.
This is exacerbated by the NHS being in triage mode, with spending on acute care crowding out prevention. To properly fund prevention, current ministers will have to pay upfront for benefits realised under future governments.
That’s where a second principle comes in: misalignment of incentives. A smoker is unlikely to consider the cost of cancer treatment — they’re fully covered by the NHS. They pay the same taxes as a non-smoker and don’t bear the costs, so their incentive to stop smoking isn’t aligned.
Of course, it’s true that humans are complex and unwieldy, much like the NHS, with behaviour that can’t be completely explained by simple economic rules. The health service doesn’t exist in a vacuum so fixing it requires a more holistic view of health. The fact is, the NHS is always expected to foot the bill, even though the benefits of prevention spill over.
We need to see health not as a cost to be managed, but instead as an asset to be developed. That means healthcare must go beyond the NHS. We need a new consensus on prevention — with this government elevating health above short-term political cycles. Investing in non-health sectors like the environment and social care will be key, alongside clampdowns where market failures are damaging our nation’s health — from tech algorithms to zero-hours contracts and bad housing.
Addressing these “non-health” factors is as important as cutting waiting times or increasing GP appointments.
Incentives need to be better aligned. Averting productivity losses due to ill health shouldn’t fall on the NHS alone. Employers have a role to play in workers’ health, which could include investing in remote work or workplace vaccination schemes. Collaboration between government and businesses on workforce health has been suggested by the ongoing Mayfield review. Tax exemptions and support for occupational health could further incentivise uptake.
We also need to rethink funding. We should require prevention budgets to grow at a faster rate than overall health funding. Innovative suppliers’ contracts — with payment by results or over time — can help address high upfront costs. We need to unlock new sources of money, such as a dedicated prevention fund (like those for cancer or innovative medicines) financed by the government but outside day-to-day NHS spending. In the long term, the savings generated by such a fund would more than outweigh the investment.
We know that prevention pays off — our research finds that if you evaluate the full spectrum of benefits of vaccines beyond the health system, they return up to 19 times the initial investment. That’s billions of pounds in net benefits to society. With prevention, we all stand to win so we should all play our part.
