Chapter 11 State healthcare provision

Question 1

Protecting the nation’s health

Answer 1

• the extent of protecting the nation’s health depends on the nation’s wealth.
• starts through availability of food, water , hygiene, etx.
• provision of medical services and education.
• keeping a productive workforce thats healthy grows GDP and this gives government money to sustain the healthcare provision.
• politics will have an influence on the gov providing healthcare.
• education about general healthy lifestyle should be part of State’s approach.

Question 2

Subsidising the poor

Answer 2

• Even where healthcare is heavily commercialised the State will have a role in providing healthcare(primary medical assistance & hospitals) to the poorest.
• provision of healthcare in this manner is seen as state’s wellfare package (redistribute wealth)

Question 3

Balancing the budget

Answer 3

• provision of healthcare is part of the state’s budget.
• whether services are provided to everyone or just those that cannot afford private care.
• cost of provision can be funded by health charges or general taxation or both.
• gov should be aware that using more advance medical treatment & tech will increase cost of healthcare by more than CPI. This may be exacerbated by increasing longevity and morbidity.

Question 4

Following social culture and/or political promises

Answer 4

• state’s healthcare approach may be determined by a political party’s ethics. This may change with changin parties.
• state healthcare may be part of national culture and so radical changes may be hard to introduce especially in the short-term.

Question 5

Resource allocation: Cost analysis

Answer 5

• simplest method of economic evaluation of a healthcare system.
• assess if a particular healthcare system is sustainable overtime & estimate required budget.
• can provide breakdown of future & current costs
• doesn’t consider the quality and effectiveness of the healthcare system.

Question 6

Cost-effective analysis (CEA)

Answer 6

• assess the costs of a healthcare system relative to the non-monetary benefits of the healthcare system.
• CEA = cost of healthcare system in monetary units / measure of effectiveness (measure in a scale)

Question 7

Benefits of CEA

Answer 7

-benefits relative to the costs can be easy to
understand.
-benefits do not have to be converted to monetary terms

Question 8

Weaknesses of CEA

Answer 8

• need for all healthcare systems assessed to have same measure of effectiveness.
• inability to account for multi-dimensional effects
• possibility that CEA will under-estimate the value of various healthcare interventions.
• does not reflect utility of healthcare servivces to population covered.

Question 9

Cost-utility analysis (CUA)

Answer 9

• assesses the costs of healthcare relative to the changes in quality of life as well as in mortality.
• emphasis on healthy years of life saved rather than number of lives saved.

CUA = Costs in monetary terms/ (Benefits in QALYs)

QALYs - quality adjusted life years.

Question 10

Cost-benefit analysis (CBA)

Answer 10

• CBA puts a monetary value on the cost of the healthcare system.
• 1 advantage is that a healthcare system can be analysed on its own merit wihtout comparing it to other systems.

CBA = costs in monetary terms / benefits in monetary terms

CBA < 1 for a project to be recommended.

-it is challenging to put amonetary value to changes in a person’s life.

Question 11

Willingness to pay (WTP)

Answer 11

-can be used to measure the value that an individual places on a health system.

• There are two ways to determine WTP
  1. direct method - done through questionnaires
  2. indirect method - by observing an individual’s behaviour and identifying how much he/she is willing to pay for medical treatment.

Question 12

Methods of State healthcare support

Answer 12

• Provided to all or means-tested
• provided directly by its own medical establishments or by commercial establishments
• lump sum or regular income (if regular payments are required eg LTC)
• flat-rated or earnings-related
• linked to some form of CPI
• different for different stages of disability
• different for different lifestages/circumstances

Question 13

Means testing

Answer 13

• State benefits are means-tested if they pay for full healthcare only in cases of financial hardship.
• Means-tested benefits are provided to people who earn less than a certain amount or to those who accumulated less than a certain level of wealth.

Question 14

Provision of treatments/services

Answer 14

• The state may provide its own medical establishments that perform the necessary treatments.
• alternatively the commercial healthcare system may provide services and gov may reimburse the expenditure, partially or fully.

Question 15

Lump sum cashpayment

Answer 15

• The state pays for the actual cost of help needed.
• this is deemed appropriate if the health event or need for care called for capital expenditure eg redesign a house in light of restricted mobility.

Question 16

Regular income

Answer 16

-The State may also provide an income or care as long as long-term care is needed.

Question 17

Salary-rated or flat-benefit

Answer 17

• salary-benefit to reward those who have contributed more through taxation.
• a flat benefit, to provide an incentive to return to work to minimise the cost on the State.
• income benefits often increase in payment in line with some form of CPI.

Question 18

Differentiation of state benefits

Answer 18

-Benefit level may depend on the severity of disability.

Question 19

Funding healthcare systems

Answer 19

• Pay-as-you-go
• Forward funding
• Incentives for self-provision

Question 20

Pay as you go systems

Answer 20

• The current working population pays for those currently in need of benefits.
• If there is a shortfall in any budget year this will be funded by the state from general tax revenues.

In order to work out State must:

1. Establish degree of state subsisdy
2. Estimate coming year’s outgo
3. Estimate coming year’s revenue
4. Adjust this so as to incorporate healhtcare outgo

Question 21

Forward funding

Answer 21

-here state estimates future benefit costs and builds up a provision for these costs before they arise.

The process works as follows:
1. Take a view on some future period eg 5 yr or 10 period.
2. Analyse the level of state provision at this point.
3. Produce model of State outgo at this and intervening years.
4. Estimate population and workforce trends
5. Forecast taxation revenues
6, calculate a specific healthcare fund such that taxation will over the period meet intended state healthcare provision.

Question 22

Incentives for self-provision

Answer 22

These incentives can take numerous forms

• state may offer tax relief on premiums fr certain insurance.
• the State can exclude some or all of the population from certain aspects of the State benefit system.
• The State can offer a reduction in general taxation where appropriate insurance is in place.
• The State can reduce the cost of private purchase of healthcare by direct subsidy to the providers.

Question 23

The role of insurance

Answer 23

• the role of insurance will depend on:
• historically evolved cultures and expectations
• budget constraints
• differing priorities to different population segments
• the approach taken to funding and self-provision.

Question 24

Roles of state in Healthcare

Answer 24

• Provider
• Regulator
• Financier
• Purchaser