When the National Health Service began some experts suggested that as everyone would now be treated for their illnesses, the population would get healthier and costs would go down. As everyone knows, the opposite is the case.

New drugs, new technology and improved expectations from the public have led to a major increase in costs. The problem the Health Service faces is how to improve the nation's health while keeping spending under control. It has become a two-fold approach: spending money more efficiently and rationing the care available.

Developments like this artificial heart pump are driving up costs

The treatment of haemophilia - a disease where the blood fails to clot - is a good example of how scientific developments have increased costs to the Health Service.

The most common form of haemophilia is caused by a deficiency in the clotting factor, known as factor eight. Patients may be treated with a clotting factor made from blood plasma or one made by artificial means. The artificial clotting factor is much more pure and less risky, but costs twice as much as the one made of blood plasma.

In one London hospital, it costs £23,000 to treat a patient for a year with the less pure product and £44,000 for the much purer product.

The costs are just about bearable, as there are relatively few people with the disease in Britain - about 5,500.

Rationed care

The problem is worse when many more people suffer from a particular disease like multiple sclerosis, for example, which affects 80,000 people in Britain.

Some MS drugs pose a huge dilema for the NHS

The drug Interferon beta-1b can help reduce the number of relapse rates in multiple sclerosis, but it is so expensive that when it was finally approved two years ago, the Department of Health felt it necessary to issue guidance on its prescription to help cut demand for it.

Drugs have helped defeat a lot of diseases and prevented others. It is often argued that preventing a fatal disease saves the health service money.

Tamoxifen, for example, is a very cheap drug that helps treat breast cancer. It may save lives, but its very success will end up costing the health service more.

That is because the patients are more likely to live into old age when their health care will be increasingly expensive. Long-term health care costs will only come down when treatments can prevent chronic non-fatal diseases like arthritis and mental problems.

Expensive routine

It's not just drugs that can be expensive. New surgical techniques are being developed which can cost the health service dearly.

When heart transplants were first used, the results were poor and the technique had to be limited to a small number of approved research centres. Now the operation is more successful and has become routine.

New technology requires specialist training

What limits it now is not so much the cost, but the availability of human hearts. When genetically engineered pig hearts become available for humans, as seems likely, more patients might benefit, but costs will inevitably go up.

Other surgical techniques have been developed which in theory will save on hospital costs - so-called keyhole surgery. The operation is done through a tiny incision which means the patient recovers more quickly and spends less time in hospital, saving money. But there was a price to pay for that particular development.

Some surgeons were not very good at it to start with and some patients died.

The problem of reconciling advances in medicine with tightening budgets is likely to get worse. Until, with luck, a new technique like gene therapy can be used to eliminate diseases with a genetic origin.