IDSB04H3 Chapter Notes - Chapter 12: Illicit Financial Flows, Centers For Medicare And Medicaid Services, School Health And Nutrition Services

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Published on 19 Apr 2017
IDSB04 Week 11 Readings
Chapter 12 Health Economics and the Politics of Health Financing
Key Questions:
- What is the relationship between health and the economy?
- How is health care system organization linked to financing and management?
- What are the different approaches to health economics and what does each emphasize?
- The health setor ad the eoo are liked here the health setor has eoe oe of the orlds largest idustries
- Growth and productivity gains in a neoliberal capitalist system often come at the expense of health which is seen with the
increasing downgrade of environmental regulations, working conditions, social protections, corporate taxes, government
social spending and wages which are all to maximize profits
Health Economics: A Snapshot
- The world spends so much on health but it is very inequitable
- Concerns for health economics: the allocation of resources, the quantity of resources that are used in health service delivery;
efficiency with which resources are used for hear purposes
o Overall, they are concerned with efficient and effective use of resources, but consider questions of equity and social
o Orthodox health economics looks at more technocratic measures to address the deficient health care delivery
- Political economy of health approach focuses on underlying forces:
o Inequitable distribution of power and resources within and across countries
o Proditeering by corporations (ex. Insurance companies, pharmaceiticals)
o A global neoliberal capitalist system that represents the interests of TNCs and wealthy elites the exploitative
resource extraction, unfair terms of trade, labor oppression, financialization and corruption that occur within this
sste oppress the ajorit of the orlds populatio, partiularl those i LMICs
- Critical political economists try to find solutions that go beyond symptoms, support the role of social and political movements
struggling for health care as a right instead of a commodity; regulating TNCs and global capital to diminish rampant
exploitation and illicit financial flows
Economic Approaches to Public Health and Medical Spending
Key Questions:
- What are the underlying assumptions of markets?
- How does health care differ from other goods/services?
- Why are markets incapable of equitably providing health services?
- The demand for health care is highly not dependent on manipulation of supply but based on need and is often time sensitive
o Table 12- shos ho the lassi suppl ad dead ure doest appl to health are it is not mediated by price
- The health sector is one where the provider has decision making autonomy and can overshadow consumer sovereignty
Table 12-2 How the Health Care Sector Differs from Markets
Typical Market Assumptions
Using Health Care Services
Buyers and seller freely enter and exit the market at
any time, based on personal preferences
Most people use health care services because of emergencies for chronic conditions that require long-
term care or to comply with school, workplace or government regulations
Buyers use personal resources to purchase goods and
Governments, employers, or privately-run insurance companies are often the main purchasers of health
care services, with consumers paying indirectly through taxes, premiums, and/or coinsurance (or directly out
of pocket)
Buyers are free to choose which good/service they
want to purchase, if any
Health plas usuall proide liited hoie to uers ith priate isurae also restritig hoie. I
many places, there is little choice in health care services or providers
Consumers may prioritize accessibility and availability of health services over choice of services or providers
Health decisions may be made for the patient by health care prioders or by family members
Buyers and sellers have equal access to information
from which to make rational decisions
Asymmetric information between providers and consumers results in patients being unaware of which
health good/services is needed, if any or which is most effective or cost-effective
At the same time, patients may not always disclose vital health information to providers
What Makes Health Care Different from Markets?
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- Health care operates on a different basis from more common market of goods and services for a variety of reasons
1. For persoal edial are espeiall, the patiet osuer at otrol he or ho he/she ill sped oe o are
an injury or illness may require immediate health care services
o Once the person enters the health care system, that person is no longer in charge of most of their decisions
(diagnostic tests, surgery, medicines etc.)
2. Parient are essentially powerless to control expenditures, but they are also far less away of medical needs
o In the health care sector, there are people that have more knowledge than others
o The internet potentially empowers (wealthier) people, but can also be dangerous
3. When the money spent or allocated by the physical is from a government program or insurance company, this may lead
physical to overuse or underuse services depending on the administrative or payment structure
o In a fee-for-service arrangement, physical have little incentive to economize
o In a managed care system, doctors tend to underserve, leaving customers without the health care they need
o There are many ways in which insurers can limit and deny access to health care services
They can make premiums unaffordable; they can impose large deductibles (paid out of pocket before
insurance kicks in); they can set annual or lifetime ceilings on coverage
4. Varying amounts of money charged for health care services may go to purposes have no health benefit excess spending on
health are series ee if the aret reall eeded
o Some medical procedures are patently useless and other are positively dangerous
5. Money is not the only consideration when analyzing health care services
o Health underpins every human activity and is therefore different from almost all other goods or services it may be
much better not to need health care services than to need them
6. Health care services reflect the characteristics and values of particular societies
o The a e shaped  politial ad ultural fators tha  ratioal alloatio ased o osuer deisio or
market forces
- Health should be viewed as a universal human right that should not e deteried  a idiiduals ailit to pa or 
market forces
Health Care Financing Redux
Key Questions:
- How are decisions regarding health financing made?
- What are the health financing challenges particular to countries of different income (GDP per capital) levels?
- What is the role of international agencies in shaping health care system financing policies?
Health Care Spending
- The OECD found that the higher the percentage of GDP spend on health care, the better the health status of a population
which results from several factors
1. The distribution of health resources may not relate to need even where there is universal coverage, care is more
accessible for the wealthy than for poorer populations, who are typically most in need
o In highly redistributive welfare states, this problem can be corrected through systems of targeting within universal
2. Equitable access to resources such as clean water, housing, sanitation, education, wealth, decent work conditions, social
security, and a host of other societal factors also affect health
3. Medical care (spending) does not reduce and may even worsen overall inequalities in wealth and power
- A factory that has increased health care spending in HICs and increasingly in LMICs is population aging
o What seems to be driving spending is not necessarily the extra needs of the elderly, but rather the patterns of
medical technology utilization where more diagnostic tests and more inventions are being used
- LMICs ad Good Health at Lo Cost – Sri Lanka, Cuba, Costa Rica
o This comes from attention to the societal determinants of health that go beyond including public, equitable (and
efficient), universal health care systems (but still including them)
Table 12-3 Comparisons of Health Indicators: Cuba, the US and Iceland
- Despite Cuas GDP ad health epediture per apita eig uh loer tha those of the U“, the to outries hae siilar health indicators, though
either is as good as Ielads
- Aordig to spedig opaies, soe fid Cuas good health outoes hard to uderstad
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