Transcript Health Economics and Health Policy

Health Economics and
Health Policy
Victor R. Fuchs
Henry J. Kaiser Jr. Professor Emeritus
Stanford University
Department of Health
London
9 May 2003
“…the age of chivalry is gone.
That of sophisters, economists,
and calculators has succeeded;
and the glory of Europe is
extinguished forever”
Edmund Burke
“When the sentimentalist and the
moralist fails, he will have as a
last resource to call in the aid of
the economist.”
Edwin Chadwick
What Are Policy-Makers Trying To Do?
Assure access to medical care
Control the rate of growth of expenditures for
medical care
• Protect and improve the health of the
population
• Achieve efficient use of health care resources
This above all: Avoid bad headlines
How Is Britain Doing?
• Fewer physicians per 1,000 population
than most other “western” countries.
Approximately 35 percent below the
mean of 12 countries
• Fewer hospital beds per capita than
most other countries. ( Exact
comparisons are suspect because beds
serve different purposes in different
countries)
• Lower health expenditures per GDP
than other countries. Approximately 22
percent below mean of 11 countries
(U.S. not included)
• Higher (8 percent) age-adjusted death
rate than 12 country mean. Slightly
slower rate of decline in age-adjusted
mortality since 1961, -1.28 vs. 12
country mean of –1.42. Excluding
Japan, the mean is -1.33.
Health Care Expenditure As Percent of
GDP 149 Countries in Late 1990’s
Averages by Decile of Real GDP per Capita
Percent
Percent
10.0
10.0
9.0
9.0
8.0
8.0
U.K.
7.0
7.0
6.0
6.0
5.0
5.0
4.0
4.0
3.0
3.0
0.0
2.0
0.0
2.0
500
1,000
2,000
5,000
10,000
30,000
GDP per capita, 1999 U.S. dollars (logarithmic scale)
Life Expectancy at Birth, 149 Countries in late 1990s,
Averages by Decile of Real GDP per Capita
Years
90
90
80
80
U.K.
70
70
60
60
50
50
U.S. 1900
40
40
0
30
500
1,000
2,000
5,000
10,000
30,000
GDP per Capita, 1999 U.S. dollars (logarithmic scale)
0
30
Efficiency
Who knows?
Extremely difficult to measure output
Two principal aspects of efficiency
A. Efficiency in utilization of services
Demand side constraints
Supply side constraints
B. Efficiency in production of services
Scale of production
Mix of inputs
Getting the right scale and mix requires…
Knowledge:
data, analyses
Incentives:
physicians, administrators,
planners
What Do Economists Have To
Contribute to Health Policy?
• Realistic approach to life’s problems:
neither romantic nor monotechnic
• Aptitude and training for
quantitative analysis
• Some understanding of decisionmaking in the face of uncertainty
• Experience in comparing benefits
and costs (risks)
• Ability to think in systemic terms:
“you can’t change only one thing”
• Appreciation of the difference between
average and marginal measures
• Appreciation of the difference between
a movement along a function and a
shift in the function
• Appreciation of the difference between
endogenous and exogenous variables
Some Specific Areas For
Collaboration Among
Economists, Physicians, and
Policy-Makers
• Evaluation of benefits and costs of new
technologies
• Measurement of how incentives affect
the behavior of patients, physicians,
and hospital administrators
• Analysis of time trends and crosssectional differences in utilization of
medical care
• Analysis of time trends and crosssectional differences in health
• Monitoring results of demonstration
projects
• Keeping policy-makers from making
really big mistakes
Current and Future Challenges
to Health Policy
• How egalitarian a system does society
want?
• How to find the right balance between
administrative control and the market?
• How to determine an appropriate number
and mix of health care personnel?
• How to finance health care expenditures?
• How to reimburse hospitals and physicians?
• How to deal with advances in medical
technology?
“The organization of medicine is not
a thing apart which can be subjected
to study in isolation. It is an aspect
of culture whose arrangements are
inseparable from the general
organization of society.”
Walton H. Hamilton