Question

Explain The efficiency/equity trade-off in the public health care system, relate this to waiting times

explain what can be done, provide a model/graph

Answer 1

THE EQUTITY-EFFICIENCY TRADE OFF :-

An equity-efficiency tradeoff results when maximizing the productive efficiency of a market leads to a reduction in its equity—as in how equitably its wealth is distributed. The debate around the tradeoff often focuses on addressing growing economic inequality within a country or region where the economy and GDP are growing.

The concern for some is that the least affluent members of society receive a disproportionately small share of the increasing wealth. Academic discussion of equity-efficiency revolves in part around whether equity and efficiency are always inversely related or whether they can both rise at once.

DEFINING AND MEASURING EFFICIENCY

The term efficiency ranges in meaning and scope depending in part on the economic sector involved. The term has a distinct meaning in healthcare.

for example, that differs from efficiency in financial markets or efficiency ratios for businesses.

In classic analysis of economic welfare, total efficiency is sometimes defined in terms of Pareto optimal allocations. In a theoretical Pareto-efficient market, no exchange of resources can make one person better off without making someone else worse off.

However, many modern economists now disregard Pareto analysis and its zero-sum resolutions. In fact, recent studies from such distinguished bodies as the OECD, IMF, and World Bank have suggested that economic performance and income equality can indeed rise in concert.

Based on analysis from multiple countries, these studies conclude that countries with greater income equality tend to have a better economic performance than countries with a lower degree of equality.

Trade-Offs Between Health Care

Within a company, health care coverage is simply a form of compensation. The trade-offs are the subject of negotiations between employers and employees regarding the mix of compensation forms. For governments, trade-offs mean that some parts of health care spending are considered public services available to the entire population, as opposed to straight commodities that are subject only to individuals’ choices.

In every country, decisions about the portion of health care spending considered a public service are part of annual budget deliberations. The nature of “public sector” trade-offs involve comparisons of the rate of growth in different public services, such as health care, education, and social services. Each country has its own political budgetary process in which such issues are addressed, and the result of the budget-making process is a decision on the rate of growth in public spending on health care.

Trade-Offs Within Health Care

Once the proportion of total compensation paid by a company in the form of health care coverage has been decided or once the budget of a risk-bearing provider or of publicly covered health care services has been set, every country other than the US enters into an explicit process of trade-offs within the basket of health care services provided. The nature of the trade-offs at this level involves giving up some benefits to get other benefits, the idea being that low-value care will be displaced by higher-value care.

Typically, those trade-offs are decided upon as a result of a set process. There are two main processes used to arrive at trade-offs: multi criteria decision analysis (MCDA) and program budgeting and marginal analysis (PBMA).

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