1 보건정치경제 (Political Economy of Health Systems and Policies) March 2015 Soonman Kwon, Ph.D. Professor of Health Economics and Policy SPH SNU

2 I. Health, Health Policy, and Health System Health: Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity (WHO) -> basic need of human being - > Necessary to fulfill other (political, economic) needs Public Policy (Klein and Marmor, 2006) - What governments do and neglect (or decide not) to do - About politics, resolving conflicts about resources, rights and morals - Authoritative allocation of values within society ( efficiency vs. equity; government vs. market; individual vs. social responsibility)

3 Perspectives on Policy (or policy-making) - Puzzling about ways of tacking social problems: rational policy analysis, finding out the optimal solution, economic evaluation - Bargaining between different interests: process, incremental and evolutionary (Definition, interpretation and framing of problem is political: e.g., financial sustainability of health insurance) Contexts (or determinants) of Public Policy - Idea: value (efficiency vs. equity), ideology, interpretation, legitimization - Interest: distributional consequences, medical profession - Institutions: machinery, formal and informal rule of the game, political institutions - History: path dependency, legacy, past experience

4 Health Care System: Resources and Organizations (Input, Throughput and Output) 1) Health care financing: different types of financial resource mobilization - public (tax, social insurance) vs. private (private insurance, out-of-pocket payment) - coverage, benefits, resource allocation, payment to providers - health expenditure 2) Health care delivery: health manpower and facilities, pharmaceuticals and technology 3) Health outcomes: health care utilization, life expectancy, mortality, morbidity

5 Example: World Health Report 2000 Health Systems: Improving Performance - Level (achievement) of health outcomes - Distribution of health outcome (horizontal equity or equality) - Responsiveness of health systems - Distribution of responsiveness - Fairness of financial contribution (vertical equity)  Level vs. distribution (efficiency vs. equity)

Financial Protection (WHO) 6 권순만 : 보건의료체계의 정치경제

* source : World Bank. WDI 7

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Health Expenditure as a % of GDP Source: WHO, Health Financing Strategy in Asia and the Pacific ( ),

Vietnam Philippines China Republic of Korea Mongolia Japan Thailand X: Tax/THE (Tot H Exp); Y: SHI/THE 10 Myanmar Lao People's D Sri Lanka Malaysia Indonesia Singapore NepalCambodia Solomon island Marshall Islands Micronesia, Fed Australia India

11 AFRO, Health Expenditure as a % of GDP Source: WHO, World Health Statistics 2010

12 EMRO, Health Expenditure as a % of GDP Source: WHO, World Health Statistics 2010

% Public in Total Health Expenditure 13 Source: OECD Health Data 2011

14 Health Exp. and Health Outcomes (Asia) Source: WHO, World Health Statistics 2010

15 Bangladesh Bhutan North Korea India Indonesia Maldives Myanmar Nepal Sri Lanka Thailand Australia Brunei Darussa Cambodia China Cook Islands Fiji Japan Lao People's D Malaysia Mongolia New Zealand Papua New Guin Philippines Republic of Korea Samoa Singapore Solomon island Tonga Vanuatu Viet Nam health E as % of GDP Data: WHO, WORLD HEALTH STATISTICS 2009

16 H Expenditure and Life Expectancy (2008) Source: OECD Health Data 2011

17 II. Types of Government Intervention and Policy in Health Care 1. Different Mechanisms a. Mandate: final incidence? - On the employer: labor market - On the consumer: product market b. Financial incentive: depending on the market mechanism - Voucher, conditional cash transfer - Tax exempt for the premiums for private health insurance c. Direct provision: NHS (National Health Service), public hospitals

18 2. Different Types 1) Entry regulation: license (for minimum standards), certificate, allowing new providers or beds according to government planning or need assessment (e.g., CON (Certificate of Need) in the US) -> could be anti-competitive 2) Price regulation: price regulation of medical care (fee scheduling), price regulation of pharmaceuticals and device 3) Quality regulation: safety and efficacy of drugs/technology, accreditation of providers, medical malpractice (negligence vs. strict liability rule)

19 2. Different types (continued) 4) Provision of information (to mitigate the problems caused by information asymmetry): Evaluation and dissemination of the information on quality a. Evaluation of health care institutions: input – throughput – output ? b. Evaluation of services: e.g., C-section rate, antibiotics use -> how to adjust for patient severity? c. Practice guidelines for providers

20 3. Different sub-sectors a. Physicians: regulation on advertising - informative or deceptive (wasteful competition)? - depends on search, experience, and credence good (characteristic) b. Hospital: requirement on personnel and facility for quality c. Payer: Mandate for the payer to accept all applicants (no cream skimming), mandate community rating or income- based contribution, uniform or minimum benefit package, d. Pharmaceuticals: reference pricing, advertising on prescription drugs, requirement of substitution of generic for brand-name drugs, technology assessment, listing (positive or negative) for reimbursement

21 Overview: NHS structure in 1979 (Oliver, 2005)

22 Overview: NHS structure in 2005 (Oliver, 2005)

23 III. Determinants and Process of Health Policy Public Policy - Institutions, Idea, Interest, History 1. Institutions ( 제도 ): Formal and informal rule of game -> Rule of articulating and responding to preferences and social demands (Immergut, 1992) Political Institutions: Constitutional arrangements, organizational structures, conventions of policymaking (Tuohy, 1999) -> affects the course of policy making

24 2. Idea or Value system Value, Idea, Moral, Norm: Assumptive world, interpretation of real world - How health is defined - Who is responsible for health?: individual vs. social - Trust on the government (public sector) Three types - Communitarian: family or social groups -> Germany, Netherlands, Japan - Egalitarian: entitlement or right to health -> Sweden, UK, New Zealand - Individualistic: USA, Australia

25 3. Interest Group Politics in Health Care Separation of Drug Prescribing and Dispensing OTC drug sales in supermarkets Physician opposition to payment system reform Physician, professional dominance - Information and knowledge - Financial resources - Cultural hegemony

26 4. Role of History: Institutional Stickiness, Path dependency or Policy legacies - Future options are foreclosed by past decisions (Klein, 2006) - Extent to which particular mode of policy action become institutionalized in a given policy area (Tuohy, 1999) e.g., Similarity between public financing (tax or social insurance) for health care and long-term care - tax financing in Scandinavian countries - social insurance in Germany, Japan, and Korea e.g., Informal rules and culture are difficult to change (e.g., attitude toward drugs in Asia, trust) e.g., Political culture, conservatism in Japan

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