Local managers need more accountability and stronger support from politicians when making tough decisions, a think tank has claimed.
Policy Research says unrealistic public expectations are being fuelled by strong central control and politicians' reluctance to discuss the cost-effectiveness of treatments.
Great Expectations: towards a sustainable health system beyond 2008 argues that the gap between what the public expects from the NHS and what it can achieve will widen as spending drops after 2008.
Politicians need to be open about what is affordable and leave micro-management to commissioners, it says.
'Without public awareness of the choices that must be made in any resource-constrained health system, unreasonable expectations can create pressures on government to intervene in decisions that are not necessarily in the best interests of the system in the long run.'
It gives hospital reconfigurations and the availability of expensive drugs as examples.
Report co-author Jessica Allen said: 'Politicians need to be much more up front about the financial limits and say we can't have whatever we want all the time. They also need to stop intervening, especially in the acute sector.'
To improve the legitimacy of local decisions, the report recommends setting up foundation primary care trusts.
This would ensure that 'direct government involvement in the management of the PCT would be reduced and there would be stronger local accountability and legitimacy and ownership of the decisions made by the PCT'.
NHS Alliance chair Dr Michael Dixon agreed that there needs to be much more public discussion from both MPs and senior managers about what can reasonably be expected from the NHS.
'There are some discussions, like over life-saving drugs, where we need central decision-making by the National Institute for Health and Clinical Excellence supported by Parliament.
'For many other issues it's quite reasonable that the local population and commissioners should be deciding together what's reasonable, for example IVF treatment and long-term illnesses.'
But Dr Dixon disagreed over the issue of whether foundation PCTs were the way forward, saying it would be unhelpful given their move away from provider functions.
He said: 'I've yet to meet someone who says behind closed doors that foundation trusts actually improve sensitivity to public needs and wants.'
Picker Institute Europe head of policy Don Redding said the best way to address raised expectations was to involve patients in decisions about their healthcare: 'There is a fear among policy-makers that if you start giving patients too much of a say, it leads to expectations spiralling. The research evidence is the opposite: it helps control costs.'