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Describe and Assess the Economic Arguments for Government Intervention in the Health Care Sector, with Particular Reference to Public Health

Introduction

In the recent past, there have been contentious debates with regard to public health and the implications of the government policies in safeguarding the same. The specific areas of concern in this regard revolve around smoking bans, food labeling, advertising of junk foods, alcohol taxation and prescription of ideal public behavior. While some segments of the populations contend that governments need to play a critical role in safeguarding the holistic wellbeing of the population, some point out that such measures are a mere intrusion in the privacy of the populations. Yet some maintain that the relative economic implications of such measures have beneficial effects on not only present but also future populations. It is in this consideration that this paper provides a critical review of the economic arguments for government interventions in public health.

From an economic point of view, Henderson (2007) asserts that public health can be considered to be a capital as well as consumption product. With respect to the former, persons in good health tend to be more valuable than their counterparts in poor health. This is because they are more economically productive than those in poor health. This is because they have the physical, mental and educational skills and capacities upon which economic productivity is anchored. As a consumption good, public health is an invaluable economic good because it contributes significantly to an individual’s physical and economic wellbeing and satisfaction.

In their review, McPake and Normand (2008) indicate that providing healthy living conditions is of paramount importance to the overall health of the populations. The government’s intervention is a sustainable measure and morally acceptable as primarily, it is responsible for safeguarding the health of its population. Comparative studies show that developing economies tend to lag behind because of the failure of the governments to provide healthy living conditions for their populations. Furthermore, the inherent differential growth between the countries that are rich and their poor counterparts is attributed to the incidences of ill health and short life expectancy in the latter (Gold, Siegel, Russell & Weinstein, 1996). Thus taking measures to increase the life expectancy of such population is posited to be the fundamental measure that could help counter the situation.

Drummond and McGuire (2001) cite that improving the environmental health in developed countries is likely to increase economic production by a significant 37% per year. This is because improving health would possibly culminate in higher productivity of the population that would then enhance the overall output. A similar effect would be contributed to by a perceived increase in the supply of labor. Most importantly, the relative increase in training would result in diversification and increase in the skills of the population and hence lead to an increase in savings. These in turn would be instrumental in enhancing production as they would be invested in intellectual as well as physical capital (Australian Government, 2009).

The costs of ill health that stem from poor public health have far reaching implications on the welfare of the populations. Briggs, Sculpher and Claxton (2007) categorize these in three main classes. The direct costs are associated with the costly procedures of treating the illnesses that the populations suffer from; indirect costs are those related to loss of the loss of productivity as a result of high morbidity rates, low life expectancy as well as premature deaths and finally intangible costs that constitute the psychological implications of the illnesses and diseases.

In this respect, Morris, Delvin and Parkin (2008) ascertain that unlike the first two, intangible cost can not be measured. The Australian Institute of Health and Welfare (2008) laments that the costs associated with illnesses that culminate from poor public health take up a significant 6.7 percent of the Gross Domestic Product of the country. In particular, a recent study that was undertaken by the Australian Government in 2009 found out that heart related complications that are associated with environmental pollution account for 1-3% of the country’s Gross Domestic product. This if transferred to other economic sectors can contribute to the growth of the country significantly. At this juncture, it can be argued that the government is justified in making timely interventions in order to reduce these costs that undermine the holistic economic growth of the country.

In addition, it is worth acknowledging that since the economic costs that are related to poor public health are born by the population, government interference in this regard is instrumental in curbing these. This contributes to the improvement of the quality of life of the population and further enhances their productivity. Conversely, Muennig (2007) argues that in a society that is experiencing significant living costs; premature deaths are beneficial as they significantly reduce the costs of the government in this respect. However, it should be acknowledged that the productivity of healthy populations can also reduce the costs of the government and boost production at the same time. The ultimate economic benefits are more than these that would be realized in premature deaths. Besides, human life has intrinsic goodness that should be safeguarded. Since the economic value of the activities that they are likely to engage in increase with time, Haddix et al (2002) maintains that it is better to prevent the costs through enhancement of public health than allow premature deaths.

Conclusion

Public health issues have raised various controversies in the recent past. Government interventions are mainly geared towards eliminating the economic costs that undermine the welfare of the populations. As it has come out from the study, healthy populations are more productive than their unhealthy counterparts. Premature deaths and costs that are related to illnesses have far reaching implications on the holistic wellbeing of the population as they are entirely borne by the same. The resultant direct, indirect and intangible costs inhibit economic growth of a country as they take up a significant percent of its gross domestic product.

In this consideration therefore, it can be contended that the government interventions to enhance public is a cost effective measure because it reduces the costs that the population would incur to cover for the consequences of the negative implications of public health. Further, it is note worthy that addressing such costs in a timely manner contributes directly to economic development of the country in the long run. Generally, enhancing the health of the population through preventive measures yields more benefits than allowing premature deaths. This deprives the country of human labor that is critical in enhancing economic productivity of the same.

List of References

Australian Government, 2009, Healthier Future for all Australians, National Health and Hospital reform Commission, Australia.

Australian Institute of Health and Welfare, 2008, Australia’s Health, AIHW, Australia.

Briggs A, Sculpher M, & Claxton K 2007, Decision Making in Health Economics. Oxford University Press, USA.

Drummond M & McGuire A (eds.) 2001, Economic Evaluation in Health Care, Oxford University Press, USA.

Gold R, Siegel E, Russell B & Weinstein C, (eds.), 1996, Cost-effectiveness in Health, Oxford University Press USA.

Haddix C, Teutsch M & Corso S (eds.), 2002, Prevention Effectiveness: A Guide to Economic Evaluation, Oxford University Press, USA.

Henderson, W 2009, Health Economics, South-Western Cengage Learning, UK.

McPake B & Normand, C 2008, Health economics: An international Perspective, Rutledge, USA.

Morris S, Devlin N & Parkin D, 2007, Economic Analysis in Health Care, John Wiley & Sons, UK.

Muennig P 2007, Cost-Effectiveness Analysis in Health, Jossey-Bass, USA..