Notice the lack of a usually large residual for the United States in the latest (pre-covid) data.

Plotting the panel data at constant PPPs, the residual for the United Kingdom is much more apparent.

When plotted at log scale, the unusualness of the UK is even more apparent.

Looking closely, you may notice several higher-income countries, such as Switzerland and Germany, showing more significant positive residuals, particularly in recent years.  The marginal elasticity at higher-income levels is probably somewhat higher than the constant elasticity (log-log) regression slope suggests.  In other words, the “real” UK residual is likely even larger.  Conversely, the United States is even closer to these high-income countries than the constant elasticity model implies.

We can also plot residuals.  This time, I’ll use a slightly more complicated model and allow for year-fixed effects. Year-fixed effects do not change the results appreciably, but this is useful if you think the independent effects of technological change or health status associated with time are important (it’s not very).

This implies the United States has averaged a little less than 20% above expected spending, whereas the United Kingdom has averaged more than 20% below expected spending.  The United States also has a lot more “company” at the upper end, particularly among the higher-income economies in the OECD, particularly in recent years.  That is, the United States residual is much closer to the likes of Germany, Switzerland, France, and other high-income economies than the United Kingdom is.

Although spending in the UK is much higher than historical levels, in real terms and as a share of GDP, and certainly not appreciably further away from the expected spending level than in the past, many people in the UK are deeply unhappy with the rationing.   Many complain about an “austerity” that makes little sense in light of the NHS’s historical behavior.  It’s not new!  It is, however, quite consistent with the view that the UK’s NHS has been particularly stingy from the outset, conditional on income levels and a gradual erosion of the historically contingent conditions that gave rise to the NHS in the first place. The wartime generation, and even those that grew up in their households, are a decreasing share of the population.  The UK’s economic circumstances have improved dramatically in absolute terms. The UK is much more likely to revert toward expected spending levels than the United States is to adopt, and particularly stick with, large-scale cost-cutting measures, conditional on its income levels, with some sweeping technocratic change.