The financial squeeze facing the NHS is set to last for a decade, according to a report by the Nuffield Trust.
By 2021-22, the health service could have a £44-£54bn black hole if it fails to hit unprecedented productivity targets, or if health funding does not increase faster than inflation, the independent health research body said.
Even if the ambitious productivity gains are achieved by 2014-15, NHS funding would need to increase by 4% a year to meet the projected demands on the service, the report said - adding that this was unlikely given the current economic climate.
The findings represent a profound challenge for NHS managers and effectively requires them to extend savings plans beyond the expected four years to the next 10, according to the report.
A poll by Ipsos Mori released alongside the report revealed that the NHS is the number one area the public want to be protected from cuts.
Almost half of respondents said they would not support cuts to the NHS and instead thought taxes should increase to sustain the current level of health provision.
The health service has been ordered by the government to make £20bn in efficiency savings by 2015.
The findings come on the eve of George Osborne’s Autumn Statement and suggest that the chancellor has some tough decisions about the next spending review.
Anita Charlesworth, chief economist at Nuffield Trust and co-author of the report, said: “There are no easy options for health beyond the current spending review.
“Without unprecedented, sustained increases in productivity, funding for health in England will need to increase in real terms after 2014-15 to avoid cuts to the service or a fall in the quality of care patients receive.”
The report, called A Decade of Austerity: The funding pressures facing the NHS from 2010-11 to 2021-22, looked at predictions for cost, growth and spending in the coming decade.
It said costs are set to rise, with salaries likely to increase when the pay freeze ends in 2014-15 and with 50% more people over 65 using mental health services by the end of the period.
The news was met with concern among those representing the medical profession, including Unite, which has 100,000 members in the health service.
Rachael Maskell, Unite head of health, said: “The stark message underpinning the Nuffield report is a future world of increasing health inequalities where the most deprived in society will bear the brunt of a cash-starved NHS.
“This will ripple out when local authorities in England take on the public health portfolio next spring. Continuing coalition reductions to the local councils’ budgets will mean serious knock-on effects to their finances which will result, in turn, to steep cuts to lunch clubs for the elderly and day centres by town halls and cash-strapped charities.
“This will have an accumulative negative effect to the health and well-being of some of the most disadvantaged groups in society. If the government is allowed to get away with its savage cost-cutting to the NHS; the poor, the mentally ill, the disabled and the elderly face a grim future.”
Dr Peter Carter, chief executive and general secretary of the Royal College of Nursing, said: “This is a worrying report and echoes many of our own concerns about the future of the NHS.
“Even though we are only two years into the drive for efficiency savings, there are already huge cuts to jobs and services, with tens of thousands of NHS posts axed or set to go.
“Nurses are currently working hard to find the £20bn in savings on the basis that it will be reinvested back into frontline care. Sadly, there is no evidence this is happening.
“We need to see evidence that these savings are being reinvested back into vital services, for example in community provision, that would ultimately improve patient care.”
Health Minister Lord Howe said: “As one of this country’s most treasured institutions, it is only right that the public want to protect the NHS.
“This is why we are committed to investing an additional £12.5bn over the course of this parliament.
“However, if the NHS is to meet the needs of an ageing population we need it to be more efficient so it can provide more and better treatments.
“The NHS is well on its way to achieving this. This year alone it has admitted over half a million more planned patients.”