UK ‘massively undervaluing’ health improvement measures – LCP

New analysis from consultants LCP has revealed that the true cost of poor health brought on by factors such as obesity and smoking is far greater than has previously been estimated – and therefore the savings from taking preventative action are much greater than traditionally assumed.  

In particular, the LCP research finds that the additional social security cost where someone receives enhanced rates of benefit because of ill health is around £9,300 per year compared with someone who is simply unemployed but otherwise in good health. 

Just looking at one public health issue – obesity – LCP estimates that the total annual benefit cost arising from people with obesity receiving enhanced benefits for sickness could be over £10bn per year – only just short of the £11bn per year NHS cost recently quoted by the Health Secretary for the cost of obesity.

This research is especially timely given the government’s focus on reducing the number of people who are ‘economically inactive’ and with the forthcoming Budget likely to confirm planned restrictions in benefit eligibility to control rapidly increasing benefit costs.

The logic of including the fiscal benefits of interventions to improve public health is that the cost-benefit trade-off when new treatments are assessed is far more positive than has previously been thought.  

At present, bodies such as NICE are asked to evaluate new drugs or other interventions based narrowly on the potential gains to individuals and the NHS. However, if the huge potential gains in reduced benefit expenditure were also factored in, this could lead to far more interventions being given the green light.  

LCP is, therefore, calling on NICE’s remit to be expanded to include evaluating benefit savings from any given treatment and for the government to earmark funds for the additional up-front expenditures that would likely follow. Implementing effective treatments would result in far fewer people in poor health on benefit, with long-term gains to the individual, the Exchequer, and the wider economy.

Key figures used in the report are:

• An estimated extra cost of £9,300 per year where people of working age are on benefit because of sickness rather than simply unemployment; this includes potential entitlement to Personal Independence Payments and a higher rate of Universal Credit for those with limited capability for work; it is estimated that each person who leaves work and goes off sick will be on benefit for an average of five years.
• A report by Dame Carol Black for the DWP which estimated that around 1 in 3 of those on Employment Support Allowance (ESA) had a condition related to obesity; in 2016, this would have implied around 800,000 people on ESA with such conditions.
• The growth in the overall number of people on sickness benefits since 2016;  this would suggest that the 800,000 figure would now stand at around 1.1m people on working age sickness benefits;  this is around 8.9% of all those of working age who are obese based on population estimates from the English Health Survey;  if this 1.1m people cost an average of £9,300 per year over-and-above the cost of people on standard rates of benefit, the total additional benefit cost of obesity would be around £10.2bn.
• A projection (using published sources ) that in the next six years, there will be an extra 3.1m working-age obese people in the UK. If 8.9% of these end up on sickness benefits, this will add up to an extra 277,000 obese people on benefits. Unless this can be prevented, the ongoing annual cost would be around £2.5bn.

Under current methods, when NICE assesses potential interventions, it is generally expected to look narrowly at benefits to the individual and savings to the NHS and how these compare with the costs of the intervention. This means that it is not routinely asked to consider the very substantial potential additional upside of savings in welfare benefits and may, therefore, be less likely to approve something which could actually be of huge net benefit to the Exchequer.

If NICE’s process was reformed so that it was asked to consider these wider benefits this could lead to considerable cost pressure on the NHS to fund additional treatments and interventions, so there would need to be an associated additional allocation of up-front funding. But this would be expected to deliver a substantial payback in the short to medium term.

Commenting, Dr Jonathan Pearson-Stuttard, Head of Health Analytics at LCP, said: “It is entirely right that proposals for additional spending on public health measures and new treatments are subjected to a rigorous cost-benefit analysis. However, there is a risk that, as a society, we massively undervalue such measures if we do not include the full range of potential benefits when they are assessed. In particular, the very large savings on welfare expenditure, which would result from public health measures in areas such as obesity or smoking, should be included, and this could result in more treatments being brought forward and approved.

“It is time that the role of NICE was expanded to include assessment of these very concrete wider benefits of public health measures and that NHS resources were expanded to fund more interventions which have a beneficial payback to individuals, the NHS and the taxpayer through health-driven prosperity.”

Co-author Steve Webb, Partner at LCP and former Minister in the Department for Work and Pensions, said: “The government is understandably concerned about high and growing levels of benefit expenditure on those who are economically inactive due to sickness. However,  public health measures and treatments which could help to stem this tide are at risk of being turned down because of too narrow a definition of ‘value’. 

“If more people could access measures designed to keep them healthy as well as manage their condition when sick, this would reduce the upward spiral of benefit spending on sickness and disability. Changing the assessment process for new drugs and treatments could be one of the most humane ways of keeping spending on sickness-related benefits under control.”

Robert King, Senior Health Economist in the Health Analytics department at LCP, said: “Currently, we only capture the value of healthcare interventions from the perspective of benefits to the individual and savings to the healthcare system. However, we know that good health, through prevention or treatment, brings much broader value to society. A more holistic valuation could prove a win-win, with patients living longer, more productive lives in better health, health policymakers and manufacturers content of a fair valuation, and the government able to count savings to the fiscal purse.”