Chapter 11 State And HC Provision Flashcards
4 overall objectives of any government’s provision of HC:
- protecting nation’s health
- subsidising the poor
- balancing the budget
- following social culture and/or political promis
What is a relaxed market-focused environment?
State has the view that it should have minimal involvement in the provision of HC benefits and should just let economic forces take their course, with private providers and insurance competing where they desire
Advantages and disadvantages of market-focused approach?
+ cheaper for the State due to saved care costs and simpler administration
+ encourages competition, both in HC insurance and HC provision
+ encourages population to take better care of themselves
+ no cross subsidies between rich and poor, healthy and unhealthy. Make it popular woth people who see themselves as healthy
+ will be lower taxes, or saved costs can be spent elsewhere
- lower security of benefits and greater uncertainty for the public
- it is not popular with unhealthy and/or poor people and generally against public spirit
4 possible models of co-existence between state provision and commercial insurance
- Insurance optional alternative. State promises comprehensive system of medical services, but insurance can provide higher quality of service etc
- Insurance optional complement. State provides limited range of medical services and leavea it to individual to fund balance
- Insurance compulsory alternative. State provides everything for members of population up to certain salary/wealth level. HC insurance obligatory for all those above this threshold
- Insurance compulsory
complement.
State provides certain HC
procedures “free” at point of
delivery. Insurance mandatory
all other procedures
Approaches that can be used to make decisions relating to resource allocation of HC
- Cost annalysis. Assess costs of various HC systems providing different services, types and level of benefits. Useful in estimating budget as well as assessing whether particular HC system is affordable
- Cost effectiveness analysis. Assess cost of HC system relative to non monetary benefits of HC system eg reduction in infant mortality
- Cost utility analysis. Assess cost of HC system relative to changes in quality of life, and changes in mortality
- Cost benefit analysis. Puts monetary value on cost of HC system and its outcomes, allows for direct comparison of cost and outcome
- Willingness to pay. Used to measure the value that individual places on health system, medical scheme. Attempts to determine how person balances costs of their HC etc
Advantages and disadvantages of means-tested State health benefits
+ cost effective way for State to target benefits to those most in need
+ may be redistributive if taxes are raised from those with more wealth and benefits paid to those with less wealth
+ those who fail means-test may be encouraged to go back to work
- people may be discouraged from providing for themselves
- may create poverty trap, whereby increases in income merely reduces value of State benefits
- may encourage people to hide existing wealth, so they have better chance of qualifying for benefits
- those who receive benefits may be discouraged from returning to work
- may be perceived as unfair to those who provide for themselves
- means-tested benefits not taken up by all who need them
- receipt of benefit has stigma that
identifies individual a poor, may discourage from claiming benefit
- perceived by some as degrading
Advantages and disadvantages of means-tested State health benefits
+ cost effective way for State to target benefits to those most in need
+ may be redistributive if taxes are raised from those with more wealth and benefits paid to those with less wealth
+ those who fail means-test may be encouraged to go back to work
- people may be diacouraged from providing for themselves
- may create poverty trap, whereby increases in income merely reduces value of State benefits
- may encourage people to hide existing wealth, so they have better chance of qualifying for benefits
- those who receive benefits may be discouraged from returning to work
- may be perceived as unfair to those who provide for themselves
- means-tested benefits not taken up by all who need them
- receipt of benefit has stigma that identifies individual a poor, may discourage from claiming benefit
- perceived by some as degrading
2 Broad methods how the State can fund welfare expenditure
- Pay as you go. Current working population effectively pays total costs for those currently needing benefits
- Forward funding. Take a longer-term view, as to anticipate future benefit costs and build up provision for these costs before they arise
4 steps to determine whether State will need to finance the difference when using a PAYG funding system, with tax revenues
- Work out how much State is going to pay toward benefits, and how much individual recipients should be expected to pay. This will determine contribution rates paid by working individuals in working population
- Estimate coming year’s outgo
- Estimate coming year’ tax revenue
- Adjust this so to incorporate HC outgo
6 steps in forward funding process
- Take a view on some future period
- Analyse level of State provision at this point
- Produce a model of State outgo at this and intervening years (would produce a cashflow model for future)
- Estimate population and workforce trends
- Forecast taxation and revenues
- Calculate specific HC find such that earmarked taxation will, over the period meet intended State HC provision
Advantages and disadvantages of forward funding
+ fund is not as sensitive to demographic changes as with PAYG
+ the system fosters forward planning so the State should be able to take necessary action in enough time to ensure cost of paying the benefits remains well covered
+ public will have more confidence that State will be able to provide HC benefits to them when need arise
- money could instead be used, with immediate effect elsewhere
- more complex to administer
- assets need to be held and managed. An investment policy will be required, investment decisions will need to be made and assets will need to be bought and sold
Incentives for self provision (4)
- State can offer tax relief on premiums for appropriate insurances
- State can exclude some or all of the population from certain aspects of the State benefit system
- State can offer reduction in general taxation where appropriate insurance is in place
- State can reduce cost of private purchase of HC services by direct subsidy to providers
Alternative ways in which government can enhance nation’s health: (8)
- Provision of screening facilities
- Providing clinics for regular check-ups
- Ensuring Health insurance available, affordable, appropriate
- Making overseas operations viable option
- Great investment in sports and exercise initiatives
- Providing advice eg on diet
- Accident prevention eg drink-drive campaigns
- Campaigns warning of the dangers of smoking
Advatages for the state providingg own establishments for HC: (2)
- Can keep a closer eye on cost and claim
- Will not need to pay for profits of commercial enterprise
Advatages of State relying on commercial establishments for HC: (4)
- Can benefit from their expertise, experience and economies of scale
- Can transfer much of the administration
- Commercial establishments may be more responsive to customer needs
- Different providers will compete for the business
