Health Issues

NHS

• Started in 1948• Beveridge report had identified poor

healthcare as a problem during WWII (along with education and social security)

• Labour government made it a priority to eradicate “Want, Disease, Ignorance, Squalor and Idleness”

• The free market system before 1948 had not worked well as a lot of the population did not have healthcare

Health care pre 1948

• Charging for healthcare led to this being under-consumed

• What problems may this under-consumption have caused?

Health as an externality

• Healthcare has positive externalities • Income is redistributed• Less is wasted because of ill health e.g.

productivity• Disease is not so easily spread because of

vaccination• Less will need to be paid out through sickness

benefits

Problems since the start…

• Medical advances including new treatments and better diagnosis have led to a massive increase in demand for the NHS

• Education was not delivered well e.g. eating, smoking, drinking alcohol

• Drugs were developed which are expensive to the NHS

• The government initially thought that the cost of the NHS would FALL after a period as health improved!

Supply and demand

• When the price is zero, demand is unlimited• There will always be excess demand, unless

funding is unlimited• Supply is determined by the budget for the

NHS and, potentially, through equipment and staffing

Supply and demand in NHS

How do you deal with unlimited demand?

• Waiting lists were the traditional way – and to some extent still are

• Introduce charges (prescription, dental, optician) for those who can afford

• Set up NICE – National Institute for Clinical Excellence

• Encourage prevention – obesity, smoking, drugs, alcohol

• Medicare Australia – AU$60 for visiting GP

NICE

• Aims to spend money where there is the biggest benefit

• An economic decision is made whether or not to approve a drug or procedure on the NHS

• This is not a quick process and NICE tries to balance this by looking at how productive people would be, could they recover?

• High cost, little benefit treatments are usually not given approval

Taxing harmful activities

Taxing….

• Aims to reduce consumption• Reduce negative externalities by internalising

these• Can alcohol be treated the same as smoking

tobacco?

Tobacco and alcohol

• Alcohol is less inelastic (more elastic)• Tobacco is always harmful• Moderate alcohol is not!• Thousands of jobs related to alcohol (and tax

revenue)

Discussion

• Should the government be involved in our lives by saying what we should and should not do?

• Should fat patients be made to wait for treatment?• Should we be doing more to reduce alcohol

consumption? • Should healthcare be provided free at the point of

care?• What are the failures of UK healthcare?• How could these failures be eradicated?

Environment

Environment

• There is discussion about the effects on the environment of human activity

• It is generally accepted that humans have caused damage

• Most damage is done by developed nations• Some developing countries are rising fast to

become big polluters, and many more are likely to follow

Who should pay?

• Developing nations argue that developed nations should pay for the damage as they are causing most of it, and that developing nations have little resources to deal with the issue

Potential solutions

Kyoto

• Signed in 1997• Developed nations aimed to reduce carbon

emissions by 5.2% below 1990 levels by 2008-2012 (recession analysis point)

• 141 countries ratified the agreement• EU chose a ‘market’ solution – tradable permits –

buy and sell permits as required with financial gain or loss – still a generous allowance but (analysis) the scheme is in place so allowances may fall and it may have more of an impact

Kyoto and the non-signers

• US and Australia refused to sign• Australia has since signed• US sees Kyoto (and Copenhagen, 2009) as a

serious threat to the development of its economy• Analysis – if the US does not reduce and there

are serious environmental problems in the US, who is to blame?

• Could the oil spill in the Gulf of Mexico be a consequence

The problem with China

• China has had a growing economy for a long time and this is having an impact on its emission

• The growing economy has led to an increase in demand for raw materials and consumer goods, which all have a polluting effect

• In addition, cars and airplane journeys are increasing which create more pollution

China

China

• ¼ of the country is now desert• Every major river system has been affected by

untreated sewage• 70% of the world’s discarded computers end up in

China, some parts reused and the rest dumped in landfill sites – toxic effect

• Acid rain causes problems in neighbouring countries

• Much development has not taken account of the environmental (or social) impact of these – causing negative externalities which will last for years

China

• The demand for resources has led to forests being destroyed in the Philippines, Thailand and Cambodia

• In order to get resources from Africa, the Chinese have helped to build dams, roads and bridges in Africa without care and consideration for the environment

Discussion

• Should the US and China have signed up to Kyoto and why?

• How can UK consumers/government help to convince China and the US to be more environmentally aware?

• Do the negative externalities only affect one country?

• Is the carbon trading scheme in the EU the best way to go about reducing pollution?

• Have we learned anything since the ozone crisis in the late 1980s?