Personal health budgets

Following the growing use of personal budgets for social care, the government has recently introduced the idea of a Personal Health Budget (PHB). This represents a set amount of money that can be allocated to an individual to spend on their healthcare in line with a care plan drawn up with your ‘local NHS team’, e.g. someone in your local  Clinical Commissioning Group (CCG). A PHB would “not normally” be used to pay for hospital care, medication or GP services. ( A PHB can be spent on the approved services whether these are provided by the NHS or private provider. For example, a PHB might be used to pay for personal care, for training personal assistants, or for equipment. For the time being, a PHB is funded by your local CCG.

From April 2014, anyone with a chronic illness (such as severe arthritis, diabetes or multiple sclerosis) and who is living at home could be offered a personal health budget to buy an agreed package of services for the health needs that arise from their long term condition.

More recently, as a result of the Care Act (2014), not only those with long term conditions but anyone who feels they can get better healthcare by using a PHB can ask for one. NHS England estimates that by 2018 as many as 5 million people will use personal health budgets to pay for their care. This is despite the fact that there is no convincing evidence that PHBs bring clinical improvements.

At the moment it is unclear what the general PHB will cover when it becomes more widely available and whether, for example, it will have to be used for both existing and future (unforeseen) health needs.

PHBs have been describes in terms of ‘personalisation’, allowing users of NHS and social care services to access services in a way that fits them as an individual, and enables the services to be tailored to their particular needs. The suggestion is that PHBs give patients more choice, which sounds great – but is it possible to increase  patient choice without having the extra capacity in the system that will allow choice?

Ways of managing PHBs 

The DoH states that there are at least three different ways that PHBs might work:

  1. You are told how much money there is for your care; you say how you want this spent; and if your CCG agrees, they arrange the services that you have decided on.
  2. You are allocated a budget that a third party, say a charity, looks after for you and helps you plan how to spend it. If your CCG then agrees with your plans, the charity buys the services for you. OR
  3. You are given the money directly to buy and manage your healthcare and support. Your CCG must agree that your plans will meet your needs and you must tell them how you spent the money. This form of PHB is currently being tested in some areas and seems the most likely way that PHBs for healthcare will develop.

Possible benefits and concerns about PHBs 

On the one hand, the government says that PHBs will help people to become more involved in discussions and decisions about their healthcare. They suggest that the greater control and choice that PHBs allow will make patients feel more positive about the care and support they get. Early trials of PHBs suggest that some people have been able to use PHBs to choose the kind of treatments they want that are not usually available on the NHS.

On the other hand, experience in the Netherlands suggested PHBs can lead to increased costs and widespread abuse. In the UK, independent research showed that PHBs will cost, on average, more than £4,000 per patient than traditional arrangements but may not lead to better care. For example, Diabetes UK takes the position that PHBs are not suitable for people with a complex condition like diabetes, and may lead to a fragmentation of service, with negative effect on care. There are indications that, contrary to usual practice in the NHS, money from PHBs is being spent on treatments that are not evidence-based.

While PHBs will involve huge administrative upheaval, involving NHS staff in assessing personal news, allocating budgets and overseeing how these are spent, and then reassessing when things change, they may also place a heavy burden on patients. As one commentator puts it, NHS patients will be expected to do the work of professional procurement managers (

It is also argued that PHBs are part of a growing trend of poaching money from supposedly ring-fenced NHS funds and spending it using other providers – a trend which, over time, will undermine the ability of the NHS to provide an equitable health service to all. It’s been suggested, for example, that those CCGs with more money will be able to offer their patients bigger PHBs, leading the way to a two-tier health service.There are also concerns that introducing individual PHBs will destroy the national system provided by the NHS of pooling financial risk: individual CCGs facing a high demand for PHBs may have to ‘decommission’ some services to fund these.  The Department of Health appears to accept that personal health budgets will lead to a reduction in NHS provision and an expansion of other kinds of provider, notably private companies (

It’s not clear what happens if a patient with a PHB runs out of money before the financial year is over: although there are Government reassurances that no-one will be denied essential care, what is meant by essential care and what happens if you need more than the essential?

Government sources have also suggested that, if patients want better care than their PHB allows, they can buy this out of their own income.  Therefore, PHBs may be less about increasing patients’  choice or rights, and more about privatising public services and altering the way that healthcare is funded.   (

There was a small pilot of the scheme involving 1000 people. The government claims that this produced  “positive evidence”, but the actual report shows that the results were mixed at best, with no clinical improvement or savings.

Certainly PHBs raise a number of important questions. For instance:

  • Will better-off CCGs be able to offer higher PHBs to their patients than less well-off CCGs, contributing to the trend of the NHS becoming a post-code lottery?
  • What if a PHB becomes insufficient to cover an individual’s healthcare needs, as set out in their care plan? Will he or she have to pay the excess? And how easy will it be to renegotiate the budget if health needs change?
  • What happens if a service or equipment purchased from a PHB is unsatisfactory or doesn’t work – will the CCG top up the budget to provide a substitute?
  • Will service users be fully aware of what holding a PHB might involve? For example, people might like the idea of directly employing someone to provide personal care or support. However, they may not realise that this will mean taking on the responsibilities of an employer (such as checking references, dealing with tax and insurance, managing unsatisfactory employees and so on), or that it will be up to them to find cover for annual leave or sickness.
  • With integrated personal budgets, will patients’ NHS needs become means tested (as with personal budgets for social care)?
  • If, as the government intends, increasing numbers of private healthcare companies and agencies will be competing with the NHS to provide NHS services, how will people with PHBs know how, and on what basis, to choose a provider?
  • Will PHBs prove more expensive for the NHS than other ways of organising care? For example, common sense suggests that the cost of equipment or services bought by an individual will be higher than the same goods or services purchased in bulk by the NHS.
  • Organising a PHB will involve members of the local health team in assessment, care planning, financial planning, and the monitoring of spending for each PHB holder. As things stand, it is not clear who within the health team has the time or the training to do this: special training and/or additional staff will cost more money – research suggests PHBs will require an 8% increase in staff.
  • The DoH says that local health teams will be able to recommend a range of organisations to help service users spend their budget wisely through a process known as brokerage. It is unclear who will take on brokerage at the moment. It could be health professionals or voluntary organizations. There are already private budget management companies. Won’t they have vested interests? And will their costs come from the service user’s PHB? See
  • Will PHBs become compulsory in time?
  • PHBs can already be seen as a kind of healthcare voucher that a patient can take to a range of health service providers (including those outside the NHS) to use towards the cost of their care. Vouchers have been seen as being less flexible than personal budgets. As the Government has indicated that in future PHBs will be available to anyone, does this mean that the NHS will be largely replaced by a voucher system?
  • Some fear that PHBs, especially if they evolve into a voucher scheme, are a step towards the introduction of a US-style insurance-based health care system. Should PHBs become compulsory and service users find PHBs too complicated to administer, or insufficient to cover their needs, the government may argue that it is more effective for patients to have PHBs in the form of a voucher that they can take to an insurance company to take out a health insurance policy that covers their care.


The DoH provides detailed information on some aspects of PHBs (see In addition, many organisations, especially those supporting individuals with long-term conditions, provide information on Personal Health Budgets. However, most of the information we have found takes the government’s stance at face value and are generally uncritical of PHBs, perhaps because the long-term implications have yet to emerge.

You can get more detailed information about PHBs from organisations such as peoplehub – a support and information organisation formed by a group of individuals with experience of using Personal Health Budgets. Some of peoplehub’s members have worked closely with the DoH in developing the use of PHBs for those with long-term health conditions and disabilities. Although they are clearly in favour of PHBs, peoplehub also highlights some of the complexities of managing your own direct PHB. Peoplehub also say that, as PHBs are still very new, there may still be problems in ensuring a fair and open way of allocating money to people. The rules governing PHBs differ according to where you live because each CCG will have their own policies. (see for information, advice and an on-line community of PHB users).

In-control, is a charity that works towards a society in which “everyone needing additional support has the right, responsibility and freedom to control that support”. They pioneered what is known as the ‘personalisation agenda’ (the belief that giving people more choice and control of the services they use would improve their quality of life) in social care and are now extending their work to include information on PHBs. A recent report on their website suggests 10 elements necessary for an effective process for PHBs for continuing healthcare. See

In addition, is a document aimed at GPs but nonetheless may provide useful information for some service users.

Further information‘personal-health-budgets’-imposed-on-10000-ch (see under ‘Funding’)

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