Health Economics Debate

Topic 1

In 2006, 10.0% of Canada’s GDP

Causes of rising health care:

* People may be buying higher quality (and hence more expensive) health services that were previously unavailable (technological advancements)

* Health prices may have risen faster than the general inflation rate

* People may be buying more health services due to growth in incomes over time

Result of rising health care:

* Pressure on government budgets raise taxes or reallocate spending

* Wasteful health care spending (20-25% of hospital procedures)

Scarcity:

* Fundamental economic problem of having seemingly unlimited human wants in a world of limited resources

* The opportunity cost of a decision is what must be given up (value of the next best alternative) as a result of the decision

Health: health status; enters utility functions

Health care: good, commodity; affects utility through effect on health

Health care financing is the activity of raising revenues (taxes, insurance premiums, social insurance contributions etc.) to pay for the provision of health care services

* In Canada: 70% public sector financing; 30% private sector financing (to compliment, not duplicate)

* Exaggerated perception of public financing’s role in Canada due to:

* Frequent comparison with the U.S.

* Pattern of public financing: concentrated in physician and hospital sectors

Health Care Funding: providing health care organizations with financial resources required to carry out health-related activities (after revenues have already been collected)

Health Care Delivery: Canada has a predominantly private system of health care delivery

* Physicians, who constitute the most influential provider group within health care

* Fee-for-service: physicians receive a fee each time they provide a service

* Undesirable incentive to overprovide unnecessary and inefficient care

* Salary: physician is paid a fixed amount a year to provide...