Chapter 11 State healthcare provision

Question 1

Overall objectives of government’s provision of healthcare might be considered under four headings.

Answer 1

• protecting the nation’s health
• subsidising the poor
• balancing the budget
• following social culture and/or political promises

Question 2

Protecting the nation’s health

Answer 2

• 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 3

Subsidising the poor

Answer 3

• 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 4

Balancing the budget

Answer 4

• 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 5

Following social culture and/or political promises

Answer 5

• 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 6

Role of commercial insurance in the provision of health will depend on nature of state provision: Possible models of co-existence include:

Answer 6

• Insurance can be optional.State provide comprehensive but insurance higher quality of service.
• Insurance can be optional complement. Here State provides limited range of medical services.
• Insurance a compulsory alternative. State provides everything for members up to a certain salary.
• Insurance can be a compulsory complement. State provides certain procedures and the rest insurance is mandatory for.

Question 7

Challenges allocating limited resources

Answer 7

• Demographic challenge - increasing/aging population has increased costs of healthcare.
• technological - increased demand for healthcare increased due to technological medical advances.
• sysyphus - life expectancy gains in older age groups and tech innovation leads to constant budget pressure.
• burden of disease - general health of the population may increase the cost of healthcare.
• access to skilled medical professionals and insfrastructure. - cost and duration of medical training is extensive. professionals may leave for other countries after training.
• competition or regulation in healthcare - market failure in healthcare market leads to the need for regulation.

Question 8

Resource allocation: Cost analysis

Answer 8

• 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 9

Cost-effective analysis (CEA)

Answer 9

• 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 10

Benefits of CEA

Answer 10

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

Question 11

Weaknesses of CEA

Answer 11

• 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 services to population covered.

Question 12

Cost-utility analysis (CUA)

Answer 12

• 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 13

Cost-benefit analysis (CBA)

Answer 13

• CBA puts a monetary value on the cost/benefit 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 a monetary value to changes in a person’s life.

Question 14

Willingness to pay (WTP)

Answer 14

-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 15

Methods of State healthcare support

Answer 15

• 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 16

Means testing

Answer 16

• 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 17

Provision of treatments/services

Answer 17

• 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 18

Lump sum cashpayment

Answer 18

• 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 19

Regular income

Answer 19

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

Question 20

Salary-rated or flat-benefit

Answer 20

• 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 21

Differentiation of state benefits

Answer 21

-Benefit level may depend on the severity of disability.

Question 22

Funding healthcare systems

Answer 22

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

Question 23

Pay as you go systems

Answer 23

• 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 24

Forward funding

Answer 24

-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 25

Incentives for self-provision

Answer 25

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 26

The role of insurance

Answer 26

• 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.