The toughest winter ever.

The Observer, 31 October 2015: Record numbers of patients will be stuck on trolleys in corridors or the back of ambulances this winter as hospitals run out of beds because of soaring demand and limited funding, the country’s leading A and E doctor has warned.

The Guardian, 21 December 2016: Record numbers of patients are leaving A&E units without being treated, new figures reveal, sparking fears that the NHS is on the brink of a winter crisis and cannot cope with soaring demand.

The Health Foundation, December 2017 - February 2018: The winter of 2017/18 was challenging for the NHS. There were several factors at play, including severe winter weather, increased flu and increased norovirus outbreaks compared to recent, previous years.

The Guardian, 8 December 2018: NHS trusts are expanding A and Es, paying for patients to be cared for in nursing homes and looking after more people at home to help them cope with the impending winter crisis, which experts have warned will be the toughest ever.

The Independent, 11 December 2019: Hospitals across the country are at “breaking point” as a winter surge threatens to overwhelm the NHS

Daily Express, 30 June 2020: Winter crisis: Jeremy Hunt warns NHS hospitals to be in a 'weaker position' later in 2020

iNews, 28 October 2021: Staff morale is plummeting across the NHS according to doctors who are bracing themselves for what they believe could be the worst winter the health service has ever faced.

For more fun along these lines, I recommend an article in Moneyweek, 21 December 2005. They point out that under new Labour, the NHS budget had been doubled...

The "backward bending labour supply curve"

From an editorial in The Telegraph which, unsually, makes some good points:

Jeremy Hunt, Britain’s longest-serving health secretary, spent years fretting over health budgets and knows better than most how easily the NHS can swallow up extra funds without patients seeing a jot of difference if the money is badly targeted.

“The one thing the Government must do before it spends any of the money is make sure there is capacity in the NHS for that money to be used for what you want it to achieve. If you allocate £5 billion for extra staff, for example, but those extra staff don’t yet exist, that money will just vanish."

... Rishi Sunak, the Chancellor, allocated £20 billion of emergency funding to the NHS to cover the cost of Covid-19, of which £15 billion was actually spent. But according to the Nuffield Trust, only £2.7 billion of that was spent on staffing costs. Given that 60 to 70 per cent of hospital’s budgets are spent on staffing, questions are being asked about where the rest of the money went.

We already knew or could have guessed most of this, that's just to set the scene. Here's the interesting bit:

Another of the traps which Mr Blair fell into was in allowing spending increases to be swallowed up by pay rises. While doctors unquestionably deserve high salaries [that's their opinion], the brutal truth is that bumping up GPs’ pay packets does not translate to better patient care.

Almost nine in 10 salaried GPs work less than full time, and there is a danger (accepted in private by those in the health sector) that higher pay will make it financially viable for even more of them to cut their hours without being any worse off. Nor does extra pay across the board incentivise GPs to work in the most deprived communities, which often have the worst access to healthcare, translating into lower life expectancy.

This is an example of the 'backward bending labour curve'. From Lumen Learning, (scroll down to the section on Labour Supply):

To see how changes in wages affect the supply of labor, suppose wages rise. This increases the cost of leisure and causes the supply of labor to rise – this is the substitution effect, which states that as the relative price of one good increases, consumption of that good will decrease. However, there is also an income effect – an increased wage means higher income, and since leisure is a normal good, the quantity of leisure demanded will go up.

In general, at low wage levels the substitution effect dominates the income effect and higher wages cause an increase in the supply of labor.

At high incomes, however, the negative income effect could offset the positive substitution effect and higher wage levels could actually cause labor to decrease. A worker making $800/hour who receives a raise to $1200/hour may not have much use for the extra money and may choose to work less while maintaining the same standard of living, for example. This creates a supply curve that bends backwards, initially increasing with the wage rate but later decreasing.

I'm happy to say that this applies to me. Once I'd finished paying rent fees to private schools, I dropped to a four days a week and started paying in the max. to my pension fund, but I still have more disposable income than when they were at school (and enough to cover my modest lifestyle). That's largely an effect of our insane tax system, but it's nice to be on the winning side of it for once.

NHS reverts to type

I have often sung the praises of the UK's vaccination programme - the wife and I got both our jabs without a hitch - but now they are winding it all down (instead of doing a final push to the finish line of around 90% double-jabbed, there is a hard core of refuseniks of say 10%) and the NHS don't seem to care any more.

The Lad went along with some mates to get his first jab at one of the drop-in sessions at Arsenal's football ground (or something like that) and dutifully kept the card they gave him with the date and batch number. He got the email (or text message or whatever they send you) with the date and time for his second jab, which should have been the week before last. He turned up on time, rolled up his sleeve and had his card ready for cross-referencing.

"Sorry, sir" said the admin person opposite the nurse, "It appears you haven't had your first jab yet, so we can't give you your second jab. Please ask your GP to update your records so that we can see it on our system. Then book another appointment."

In a sane world, they could have just pretended to give him a first jab (the doses are identical AFAIAA). If in doubt, just jab people! There might be a few nutcases who end up being vaccinated half a dozen times, but so what?. He has just set off for his fourth attempt at persuading the GP surgery to update his records, having been fobbed off with the usual excuses the previous three times.

I'm keeping my fingers crossed for him, but it wouldn't surprise me if they think up yet another excuse for not doing what they are paid to do. I do wonder why they are happy to waste so much of our time and theirs to get out of doing something that would be quicker than endlessly fobbing us off. Or maybe they'll say they'll do it and then simply not do it. Or maybe they'll do it and it still won't show up on the system.

Ah well.

Update. He just came back. The GP surgery took his card last week so that they could 'update the system' but they admitted they'd lost it ("We got a lot of those cards last week.") and gave him a bit of paper with the same info on it instead.

Questions, questions...

Yup, as I already said.

For example here.

From the BBC:

People working in social care in England and Wales have been twice as likely to die with coronavirus as the general working-age population, Office for National Statistics figures show.

But [NHS] workers have been no more likely to die than other workers.

People in care homes and care workers have been treated as the poor relatives in all this*. Yes, a couple of hundred NHS workers have died, which all goes into the "NHS as heroes" myth, but if you look at the actual numbers, strip out the retired NHS workers who were press-ganged back into service and died*, in deaths/100,000 workers, nurses and doctors have the same (surprisingly low) chance of dying of COVID-19 as the general working age population.

So it appears that very few NHS workers were infected "in the line of duty", or at least no more than anybody else who gets infected while commuting or at work.

* Two actual bloody outrages, if you ask me.

They own land! Give them money!

Apropos my comment on the last post "They own land! Give them money!", from The Guardian:

London NHS Nightingale hospital will shut next week

No 10 says decision is due to limited demand, with no coronavirus admissions expected in coming days

The showpiece Nightingale hospital in London will shut next week after treating a small number of patients but will be kept “in hibernation” in case a second wave of Covid-19 infections emerges.

No further patients will be admitted to the facility, which was created amid much acclaim in just 10 days, and the 12 patients being treated there at the moment are being transferred to other London hospitals...

Originally planned to have 4,000 beds, the Nightingale has treated just 54 patients since it was opened by Prince Charles on 3 April and received its first patient on 7 April. It has not admitted a new patient for a week as London hospitals have had spare capacity in their own intensive care units.

The four other Nightingales that were opened to stop hospitals being overwhelmed – in Manchester, Birmingham, Bristol and Harrogate – will also be wound down, though the London hospital will shut first. All were conceived in March, when ministers and health service bosses were concerned that NHS hospitals risked being overwhelmed by significant numbers of people needing to be ventilated to keep them alive, as Italy was confronting at the time.

But while the Manchester hospital has taken some patients, its sister facilities in Birmingham, Bristol and Harrogate have not admitted anyone.

Well, I thought it was funny

If only the NHS had employed a few people like this...

From The Independent:

A dystopian novel about a deadly pandemic wreaking havoc across the world that was rejected 15 years ago has finally been published after reality once more proved itself stranger than fiction.

Scottish author Peter May, 68, a former journalist and BBC screenwriter, wrote Lockdown in 2005, imagining London as the epicentre of a global outbreak, only to see his manuscript turned away by publishers, who deemed its subject matter “extremely unrealistic and unreasonable”.

“At the time I wrote the book, scientists were predicting that bird flu was going to be the next major world pandemic,” Mr May told CNN. “It was a very, very scary thing and it was a real possibility, so I put a lot of research into it and came up with the idea, what if this pandemic began in London? What could happen if a city like that was completely locked down?”

His novel centres around a police detective investigating the murder of a child after their bones are discovered at the site of a makeshift hospital, an idea anticipating the opening of the NHS Nightingale at the capital’s ExCeL Centre this week.

As far-fetched as this scenario might have seemed at the time (and still does), it was never beyond the bounds of probability, and you'd think that - like South Korea - health services/governments would at least have some plans in place for a recurrence of Spanish Flu, Hong Kong flu, SARS, swine flu, MERS, bird flu. Not to mention Ebola. There have been five of these outbreaks in the last two decades, and just because we were lucky each time, that was all it was - pure luck.

Even if the NHS didn't stockpile the necessary stuff (they wouldn't have known exactly what to stock pile and how much; they wouldn't know which age groups would be worst affected; you can't develop a test for a virus you don't know about yet etc), they could at least have had contracts in place with the manufacturers and laboratories to churn out however many million bits of kit at short notice; and some plans on what to do if it affects children, pregnant women, younger adults or older people worst etc.

Last night I had the strangest dream

Last night I had the strangest dream
I ever dreamed before
I dreamed the world had all agreed
To be stupid and even more
I dreamed I saw a mighty room
The room was filled with men
And the paper they were signing said
They'd wreck the economy more

And when the papers all were signed
And a million copies made
They all joined hands and bowed their heads
And grateful prayers were prayed
And the people in the streets below
Were dancing round and round
And clapping for the NHS
and banging pans and standing round

Last night I had the strangest dream
I ever dreamed before
I dreamed the world had all agreed
To wreck us all for evermore

Apologies to Simon and Garfunkel.

The above song came unbidden to me this morning. Its been a long time since I felt the need to blog but the extra 1.6 billion pounds that the government is going to give to the local councils ( despite cutting and curtailing their budgets by 3% each year for the last decade or more) just makes me aware that this all could be a nightmare that could have been avoided.
How you ask?




The full link can be accessed here (it's for medical professionals only). Well its a free country. Everyone should read it. and then take at least 10000 iu a day.

Fact is that 2000-4000 iu is woefully inadequate to beat infections. Your body will manufacture 20000 iu if you strip off and lie in the sun at midday in June until you turn slightly pink and you have enough cholesterol for the UVB rays to turn into Vitamin D3.

A bottle of 360 x 10000iu ( thats right 3.6 million units costs £25* (* average) might be less if you bought in bulk). The economy, work, everything that has happened in this country since the begining of March, need not have happened. We need not be in lockdown. The government could have spent £2 billion, which is a drop in the ocean to be honest considering how much they are flinging around willy nilly with no thought to the amount of debt that this will cause the economy.

Bought us all a bottle of that 3.6 million units and told us to all take at least 20000 iu a day to make sure we didnt succumb to Covid 19 and to boost our immunity and therefore protect the NHS, cure a few subclinical cases of rickets, stave off MS and a few other diseases and other viral conditions in the process.

It would have saved money and also saved the economy. We could have been in a better situation economy wise than Sweden and we neednt have had social distancing . By the way the deaths in Sweden are mostly from the Somali community who cant make Vit D in Sweden because they are so dark skinned and need five hours in optimal conditions with all their clothes off. And anyone who knows what Somalis wear in the height of a Swedish Summer will know that that doesnt happen. There have been countless articles asking why the BAME community are overrepresented in the death statistics. This is the reason.

I can probably guarantee you that most of the deaths above 65 were on statins. If you don't have enough cholesterol you cant make Vit D3 from the sun, there's simply not enough. Why are we languishing inside and not enjoying this sunny springtime weather? Because the government said so? Let me remind everyone that is reading here that every atrocity in Germany between 1933 and 1945 was legally sanctioned. By its government. The government and the health service if they had their heads screwed on should have made sure no one was Vit D3 deficient, for years. They knew that everyone was deficient. There have been countless articles since 2010.

Oh and tablets for a fat soluble vitamin? Do you see Vitamin E in tablets No you see it in oil. caps So tablets don't work.

The reason that the government didn't do this is because the pharmaceutical companies are losing profits and want to make a useless vaccine. There are coronaviruses every year, that are common colds. They've been working on a patented cure for the common cold since the 1950s . Unfortunately the only thing that actually works is a high level of Vitamin D3, which makes no money for the companies.

We've been sold down the river... Why have we sacrificed our economy when it had a simple cheap solution?

THINK! it could save your life. 97% of people in the UK are Vitamin D3 deficient. Start asking your MP about this document and why this deficiency which is widespread hasn't been tackled in the last ten years.

Yes, that's nineteen individual tragedies, but,,,

From the BBC:

Thousands of people in the UK have now died with coronavirus, including doctors, nurses, surgeons and other NHS workers.

The government has said 19 NHS workers have died so far, with doctors who came out of retirement among those who have lost their lives...
----------------------------------------
In the general spirit of being factually correct yet controversial...

Total coronavirus-related deaths in the UK so far, 9,875.

About ninety per cent of deaths were people over retirement age, and ten per cent were people of working age (from here, other sources say much the same thing).

So we'd expect to have had about 988 deaths among working age population.

Total working age population (18 to 67) 42 million

988 deaths ÷ 42 million = 24 deaths per million.

Total number employed by NHS = 1.5 million

1.5 million x 23/million = 36.

We could adjust that up or down for various things, for example:

- Just because somebody in the NHS catches it, it doesn't mean they caught it "in the line of duty". They might have been infected by family or friends, caught it on public transport or from a colleague.

- We could refine the exercise if we could split the 24 deaths/million into three categories by relative risk (highest to lowest)
a. "people with underlying health conditions who are too unwell to be in work anyway"
b. "people who are healthy enough to go to work and are still working"
c. "people who are healthy enough to go to work and are staying at home"

- Not all NHS staff are frontline (don't come into contact with patients or general public), so perhaps we should multiply by 1 million, not 1.5 million.

But this would all be guesswork, so let's leave our prediction at 36, which is twice as much as actual 19. I doubt whether the death rate for NHS workers is significantly higher than for everybody else in the category "people who are healthy enough to go to work and are still working". One thing we do know is that the death rate for NHS workers is a lot lower than for London bus drivers.
---------------------------------------
Clearly, the NHS senior people have failed their front line staff (and the general public) very badly. It appears that they never bothered with a contingency plan for such diseases, which come along every ten years or so. And every health minister for the past twenty years should be grilled on why they never thought to ask whether the NHS had such plans. The lot of them should be sent into exile. You can't just blame it all on the current incumbent.

The front line staff have my every sympathy and I do not envy them. But, they should be aware that the number of NHS people who have died with coronavirus (so far) is not surprisingly large and appears to be half that of the general working age population.

Fun With Numbers - the NHS

From the BBC:

The government has confirmed that 2,000 NHS frontline staff out of half a million in England have been tested for coronavirus since the outbreak began.

Half a million? And how many people does the NHS employ in total?

Factcheck says about 1.2 million in England.

So it's not a health provider with a minority of necessary non-medical staff - admin people, IT geeks, cleaners, maintenance. It's a large bureaucracy with a minority of nurses, doctors, ambulance drivers etc.

By the way, I am still a big fan of the general idea of the NHS, somehow it seems to work well in practice, but how much better could it be?

Ventilator Blues*

From The Daily Mirror:

Under-funding over a decade means NHS is lacking equipment and intensive care doctors - the government now wants factories to switch up production line in bid to battle disease

Woah there!

1. However much money you give the NHS, they will always spend all of it and want more. There is practically no upper limit on treatments they could offer and provide, or that people would demand if available quickly and easily.

I lived in Germany in the 1980s, there were no waiting lists and superb service, more or less free at point of use, so people went to the doctors with the most minor ailments or conditions that any Brit would just learn to live with.

The NHS gets what is gets, and is responsible for rationing and providing treatment in the most cost-effective way.

2. Does the NHS do a great job overall? Yes. Could it be better for the same money? Also yes. They don't do "joined up".

3. The Tories have increased annual NHS spending by a lower rate than New Labour did, but they have still increased it year on year. There seem to be far fewer stories about rampant waste and corruption, like £10 billion on the NHS Spine, so it seems that the NHS has responded to the less generous budget by trimming the fat (hooray), but I'm sure there is still some fat left to be trimmed.

4. Hindsight is a wonderful thing, but who, if anybody, should have seen this coming? Experts in the NHS or some here-today-gone-tomorrow Health Minister battling with daily crap? It's the NHS's budget and they decide what to prioritise, like cancelling non-essential operations.

5. Let's assume the NHS really needs 100,000 ventilators, seems like a fair estimate, and that their experts should have seen this coming years or decades ago. As far as I can make out, ventilators cost about £10,000 each (if anybody knows better, please leave a comment).

6. So they could have started stockpiling them ten years ago, 10,000 every year, annual outlay £100 million. This sounds like a lot of money, but it's about 0.1% of the NHS annual budget, or about £1.50 per UK resident per year.

7. But they didn't, and whose decision was it?

* Song from Exile on Main Street.

Lock 'em up and throw away the key...

From the BBC:

The NHS fraud squad is investigating GPs in England amid suspicions they are claiming for non-existent patients.

Doctors get an average of £150 a year for each patient on their list, but records show there were 3.6 million more patients in the system last year than there were people in England.

The discrepancy prompted NHS England to employ [Crapita] to start chasing up these so-called ghost patients.

The NHS Counter Fraud Authority is now launching its own investigation.

... in the following order

1. Whoever thought it was a good idea to pay each GP a quarter of a million quid a year in the first place. From the article:

The average GP has around 1,700 patients on their list so the payments make up a significant chunk of their income.

1,700 x £150 = £255,000, and that's just a 'significant chunk'. How much more do the buggers get?

2. Whoever thought it was a good idea to pay GP's on this basis (rather than work actually done).

3. Whoever let things slide for so long rather than crunching the numbers every year as a matter of routine.

4. Whoever thought it was a good idea to throw money at Crapita for doing something which the NHS Fraud Authority is (or should) be doing.

5. A few GPs and their chief receptionists who must have been complicit in the whole scam, pour encourager les autres.

Nobody move or lower ranked NHS managers will throw more sickies!

From The Daily Mirror:

Almost 11,000 doctors, nurses and support staff were off work daily with stress, anxiety and ­depression, the latest NHS Digital figures reveal.

The biggest proportion of sick days triggered by stress was among lower ranked managers for whom it was one in three.

Across the NHS stress now accounts for 24% of all days lost to sickness. Five years ago it was 19%.

Sara Gorton, of Unison, said: “The huge shortage of staff is the biggest problem and Brexit uncertainty isn’t helping."

... let's fund the NHS instead

Meme kindly created by Jeremy L:

Your taxpayers' money, hard at work.

From the BBC:

The NHS in England is to get an extra £20bn a year by 2023 as a 70th "birthday present", Theresa May says. It means the £114bn budget will rise by an average of 3.4% annually - but that is still less than the 3.7% average rise the NHS has had since 1948...

The five-year funding settlement covers just front-line budgets overseen by NHS England. About a 10th of the overall health budget is held by other bodies for things such as training and healthy lifestyle programmes, including stop smoking services and obesity prevention programmes. The BBC understands these will be protected, but beyond that it is unclear what will happen to them.

?!? One-tenth of £114 bn is £11.4 bn, which is approx equal to our net contributions to the EU budget.

Would anybody like to chip in for a battle bus, with "We spend £220 million a week on stop smoking services and obesity prevention programmes. Let's fund the NHS instead." written on the sides?

Hypothecated taxes etc.

1. For an economist, the idea of hypothecating taxes is a bit of a nonsense. Nonetheless, politicians know that earmarking a tax makes it more acceptable to those paying it.

2. I received a classic KLN via Twitter (so classic that even some socialist LVT supporters have advanced it), along the lines of this:

"If you phase out National Insurance and have Land Value Tax instead, how will the government pay for people's unemployment benefit and old age pensions?"

To which the answer is, don't confuse the tax raising side and the spending side. The government can pay pensions and welfare out of borrowing, National Insurance, income tax, Land Value Tax or anything else.

3. We also know that the Home-Owner-Ist majority hate the idea of Land Value Tax. Why should they pay for something they already own, that sort of thing.

4. It is widely believed that it is widely believed the NHS to be some sort of highly prized national treasure (I have no idea how true this is), but we know that it has to be paid for, cost approx £125 bn per year.

5. Sticking with politics, Value Added Tax is imposed on each Member State by the EU. (There is a also widespread misconception among the chronically innumerate that all our VAT receipts are handed over to the EU, but put that to one side). Brexit is our Golden Opportunity to rid ourselves of this troublesome tax, revenues approx. £120 bn per year, economic damage/deadweight costs at least half as much again.

6. With my Georgist propagandist hat, I have merged 1 to 5 into a nice simple policy proposal:

Now that we are leaving the EU, we can scrap the most damaging and regressive tax, Value Added Tax. To make up the shortfall and pay for the NHS, we can have annual "NHS contributions" of 1.8% on the value of each home, which landlords can add to the rent if they so wish. On average and in the longer run, people will get their money back. It's low cost mass insurance - those who seldom need the NHS should be grateful to have their health.

Pensioners, who cost the NHS on average £5,000 a year each, have nothing to complain about, as in most cases their "NHS contributions" will be far less than the corresponding cost of private health insurance/private health treatment. Some people in higher value homes will be paying over the odds, but they are free to trade down to something better value. 

Health tourism and acceptable losses

From fullfact.org:

Who is a “health tourist”?

Qualifying for free NHS care isn’t based on nationality or where someone was born. It’s based on whether you are “ordinarily resident” in the UK and the type of treatment you need... The government has estimated that treating deliberate health tourists and those taking advantage costs around £100 to £300 million a year. Those are incredibly rough figures.

At the moment there are some services which, no matter whether you are “ordinarily resident” or not, you can’t be charged for. The costs estimated by the government also include these services, like going to see a GP or using Accident and Emergency. So even if the NHS charged for all the services it possibly could and received the money, it wouldn’t cover the full amount health tourism is estimated to cost.

From NHS Digital:

Hospital admissions in England rose to record levels last year, with 16.2 million admissions during 2015-16 - up from 12.7 million ten years ago.

OK, so let's assume the NHS starts doing identity checks on every single hospital patient to deter  health tourists. Firstly, it will lead to some unpleasant situations where somebody is a bit old and doddery and simply can't produce a passport or driving licence etc, what are they going to do, turn them away? I doubt it. Leave them in the waiting area while a relative is despatched to try and rustle something up?

I can easily imagine that this will add £20 to the cost of a hospital visit. Some officious person will disappear with your passport and council tax bill for ten minutes just to check they are legit (i.e. have a nice cup of tea while you're waiting).

Cost of weeding out health tourists = 16.2 million x £20 = £324 million

Upper end of estimates of cost of health tourism = £300 million.

So, as unpalatable as this may sound, it's cheaper just to accept it.

US taxpayer funded health spending vs NHS

I stumbled across this somewhere or other recently, and it is quite chucklesome.

US taxpayer funded healthcare spending per capita $5,078 (about £3,600).

UK taxpayer funded spending (i.e. NHS), about £2,000 per capita.

Talk about shit value for money!

Economic Myths - NHS spending and the Baumol Effect

This theory (also known as Baumol's cost-disease) is given a lot of credence by e.g. The Economist, the LSE and Tim Worstall/Forbes.

The Economist explains it thusly:

HEALTH-CARE expenditure in America is growing at a disturbing rate: in 1960 it was just over 5% of GDP, in 2011 almost 18%. By 2105 the number could reach 60%, according to William Baumol of New York University’s Stern School of Business. Incredible? It is simply the result of extrapolating the impact of a phenomenon Mr Baumol has become famous for identifying: “cost disease”...

In 1913 Ford introduced assembly lines to move cars between workstations. This allowed workers, and their tools, to stay in one place, which cut the time to build a Model T car from 12 hours to less than two. As output per worker grows in such “progressive” sectors, firms can afford to increase wages.

In some sectors of the economy, however, such productivity gains are much harder to come by—if not impossible. Performing a Mozart quartet takes just as long in 2012 as it did in the late 18th century. Mr Baumol calls industries in which productivity growth is low or even non-existent “stagnant”.

Employers in such sectors face a problem: they also need to increase their wages so workers don’t defect. The result is that, although output per worker rises only slowly or not at all, wages go up as fast as they do in the rest of the economy. As the costs of production in stagnant sectors rise, firms are forced to raise prices. 

These increases are faster than those in sectors where productivity is improving, and faster than inflation (which blends together all the prices in the economy). So prices of goods from stagnant sectors must rise in real terms. Hence “cost disease”.

The theory is that therefore health spending will inexorably rise as a percentage of GDP.

It seems like nonsense to me. For sure, in relative terms the cost of labour-intensive services increases, but only in relative and not in absolute terms. In truth, the cost of labour-intensive services stays constant and the price of automated, mass manufactured products decreases.

Think about the two extremes.

a) Wages rise exactly in line with GDP, in which case, the cost of labour-intensive services, wages generally and GDP go up in step. Health spending stays constant as a percentage of GDP.

b) All the benefits of automation go to the people who invent and own the machines that make stuff and wages stay constant. In this case, wages fall as a percentage of new enlarged GDP and the cost of labour-intensive services also falls as a percentage of GDP.

In neither scenario does the cost of labour-intensive services like healthcare increase! That only happens when there is a sharp contraction in GDP, wages in protected sectors like health being inflexible downwards - the sharpest increase in NHS spending as a percentage of GDP was between 2007 and 2009.
----------------------------------------
I think that the tried and tested explanations for the increase in healthcare spending are the correct ones, these apply to both extreme types of funding (USA and UK), in no particular order and these all overlap and tie in with each other:

1. Most treatment is paid for by insurance, whether that is private premiums or compulsory mass-insurance via the tax system, meaning that treatment is free or cheap at point of use, it is "other people's money".

2. Healthcare is a victim of its own success. They invent new treatments for non-curable/non-fatal diseases/conditions, which means that such diseases are passed down to more children and people live much longer. So there are more people with those conditions, and healthcare gets more and more expensive the older people are, because there is more that can and will go wrong.

3. Healthcare feels like a necessity from the point of view of an individual (choice between living or dying), but is actually a luxury good i.e. the amount that people are willing/able to spend on it rises disproportionately as a share of income; so healthcare takes up a disproportionate share of GDP growth.

4. They keep inventing new and more expensive treatments. Heart transplants were a novelty fifty years ago, now they are almost routine. Thirty years ago, getting HIV was more or less a death sentence, so people just died. Luckily, the virus itself is nowhere near as virulent as it was, and they have developed medicines that enable people with HIV to live fairly normal lives for decades.

5. Politicians in Europe can always earn a few brownie points with the voters by promising to spend more on healthcare, even though the law of diminishing returns applies and a lot of the increase in health spending just goes into higher profit, salaries and white elephant spending and not actual additional treatments. This is particularly crass in the UK as there is a disconnect between 'spending on the NHS' and 'spending on healthcare'. Compare and contrast - all nurses and doctors get a 3% pay rise vs. the NHS employs 3% more nurses and doctors on the same salaries.

6. There is massive rent seeking in health care. Back in pre-NHS days, GPs would practice discriminatory pricing and charge wealthy people more than poor people for the same treatment. Faced with a choice of life or death, somebody with only a few hundred quid savings can't pay more than a few hundred quid. The GP can hold millionaires to ransom and charge them tens of thousands. Pharma companies love inventing medicines that will alleviate symptoms of long-term incurable diseases/conditions. The bigger the NHS gets, the higher the salaries that all the top dogs can pay themselves and get away with it. And I am sure that the US insurance companies really take the piss.

7. For the benefit of Ralph Musgrave, let's chuck in this phenomenon, this one and this one for good measure.

Here endeth.