ABSTRACT
This chapter reviews how these decisions are made across the NHS and the input of health economics into them. It describes economic and other approaches to these issues. The chapter becomes clear that while economic ideas and techniques have a part to play, there is no straightforward technical solution to determine spending levels - for the NHS it is ultimately a political decision. It deals in more detail with issues of rationing at these lower levels in the system. For governments the choice is more complicated, and involves reaching a decision about spending not only on the NHS but education, defence and so on. In this case, the first call on the government's finite resources should be for those areas which produce the greatest benefits. While economics can provide a way of thinking about how to determine total healthcare budgets, there are - as economists would be the first to recognise - practical problems with their approach.
