Spend, actual and projected as per the Kings Fund, all state in 2017/18 prices, is as follows:
OK, static, pretty much, in real terms. But they have used the GDP deflator.
Ritchie then wants to tell us that medical inflation is different:
The problem is that the data does not tell the whole story. The figures are in 2017/18 prices but that’s adjusted by normal inflation. However, as the Institute of Actuaries have noted (and they’re good with numbers) medical inflation is higher than CPI.
They have actually taken changes in the NHS budget as their definition of medical inflation:
“Inflation” in the NHS context would be measured by changes in the NHS
budget from one year to the next.
But we can’t take numbers using the GDP deflator and then alter them by CPI:
Although at first glance it may seem that CPI and GDP Deflator measure the same thing, there are a few key differences. The first is that GDP Deflator includes only domestic goods and not anything that is imported. This is different because the CPI includes anything bought by consumers including foreign goods. The second difference is that the GDP Deflator is a measure of the prices of all goods and services while the CPI is a measure of only goods bought by consumers.
You just can’t mix and match your inflation measures in that manner.
That’s before we get to the fat that we don’t buy NHS services as consumers so we can’t compare them to the CPI in the first place.
Finally, if medical inflation is higher than general, imagine that’s true? Then we’d like to change the system of health care delivery before it swallows the entire economy, wouldn’t we?