Allocative efficiency of health spending on older people Institute for Fiscal Studies

This project investigated how public resources are allocated across health and social care services for older people with different types of needs, and the effect on health outcomes and wellbeing. It used national data, including from Hospital Episodes Statistics and the English Longitudinal Study of Ageing.

The project was structured around six strands of work:

1. Understanding variation in the use of publicly-funded hospital care services among older people
   Findings included that those aged 65 and over and who are highly educated use considerably more NHS outpatient care than those who are less educated but with the same observed health needs.
2. How does use of health care services change in the final years of life?
   Findings included: hospital spending increases sharply in the last two years of life, even when taking account of the conditions that people go to hospital for; the relationship between time to death and spending varies across sociodemographic characteristics.
3. Relationship between publicly-funded formal, privately-funded formal and informal social care
   Findings included: the receipt of care is a dynamic process – people start and stop receiving care over time; changes in the receipt of care are linked to a number of aspects, including difficulties with daily activities and the loss of a partner.
4. Impact of variations in social care provision on hospital use
   Findings included: cuts to social care spending substantially increased the use of A&E by older people; this increase is most seen among those presenting with relatively low severity conditions; the impacts of the cuts are most noticeable among older people and those living in more deprived areas.  
5. Tensions between national standards and local funding for social care
   This analysis found that there is significant tension between national standards for social care and increasing reliance of local authorities’ funding on local taxation, and that ongoing reforms to local government finance risk increasing the adult social care funding gap.
6. Validating self-reported health diagnoses with administrative hospital records
   The analysis found substantial disagreement between self-reported diagnosis data and the diagnoses recoded in hospital records, and suggests that researchers should exercise caution in using survey data alone to examine the incidence of particular conditions.

The findings have been disseminated to the Department of Health and Social Care, NHS England and Age UK, and have generated considerable media interest. The results of the project are helping policy makers understand how resource allocation can affect health outcomes for older people, and how money could best be targeted to achieve policy objectives.

Contact details

For more information, contact George Stoye, Associate Director at the IFS.