Lecture 16 Assoc. Prof. Sencer Ecer HEALTH ECONOMICS Comparative Analysis Lecture 16 Assoc. Prof. Sencer Ecer HEALTH ECONOMICS

Comparative Analysis Canada Health care costs less in Canada Universal Medical care system with strong cost controls, the US and Canada started from about 7% share of health expenditures in GNP in 1970s, but Canada is up only to 10% while US is up to 17% of GNP

Universal Insurance and International Comparisons Many regularities exist across countries Medical care is a luxury good Health care spending per capita in the US is in proportion to other countries’ incomes, even though it is much higher This linear relationship doesn’t depend on systems Higher income or additional medical spending improves infant mortality and adult life expectancy in general But US fares worse than its income or medical spending would imply

Universal Insurance and International Comparisons -2 As opposed to the long term economic development effect, short term economic downturns have a positive effect on physical health in industrialized countries (more exercise, less stress, less eating out, higher air quality due to less traffic) (Ruhm, 2003) Effect of short term fluctuations on mental health is less clear, similar to physical health for near-elderly (Ecer, 2011) but seems to be the opposite for young

US goal Balance access to care (and coverage) and cost-control Share of GNP devoted to health care ~ 17% in the US Yet, about 47 million Americans did not have health insurance (young, low education, low income)

Universal Coverage Medical care is a merit good, access to all should be assured Uninsured ends up at the doors of the hospitals anyway Other pay for these costs Solves adverse selection Ways to accomplish universal coverage 1)Britain provides health care directly, 2)Canada provides health insurance Employers provide insurance (US system)

What core benefits should be in Universal Health Insurance The following are for the most part unanimously agree on not to be covered: Psychiatric care Substance abuse care Family planning and abortion Fertility treatments Elective cosmetic surgery More debatable services to be covered: Long term care Friends and family are substitutes, demand maybe too elastic, leading to too much moral hazard, hence welfare loss Out-of-hospital prescription drugs Dental services