Unit 1 Micro: Market Failure in Private Health Care
The supply of health care in the UK is an important economic, social and political issue. Demand for health care treatments grows year by year as the population expands, ages and as incomes rise. For millions of people private health care is regarded as a necessity even though the NHS provides a vast range of services free at the point of use. Treatments such as cosmetic surgery, hand surgery, laser eye treatment, physiotherapy, weight loss services and hip and knee replacements are offered by a range of private sector providers in addition to state health care facilities.
read more...»Minimum beer prices, May not be the solution for binge drinking.
Teresa May has copied Nicola Sturgeon’s proposals for minimum prices of alcohol which appeared in Scotland last year. Last year’s budget had significant increases in excise duties on stronger beer, lager and cider.
This resource from the Centre For Policy Studies may help pupils and teachers to evaluate different forms of government intervention and their effectiveness.
Unit 1 Micro: Unintended Consequences of the Smoking Ban
Here is an example of the law of unintended consequences where unlikely side-effect is a thoroughly welcome positive spillover effect. Researchers are finding that the number of premature births and exceptionally under-weight babies in Scotland is falling - watch this video - and then consider why this might be happening.
Scotland was the first country in the UK to ban smoking in public places, followed by Wales, Northern Ireland and England in 2007. Several years on, nearly one-in-five of mothers to be still smoke - how sad.
Unit 1 Micro: 50 years of anti-smoking campaigns and awareness
No one is in any doubt that smoking kills and for half a century the Royal College of Physicians has been warning of the damaging health consequences of nicotine consumption and addiction. They continue to campaign for higher prices and tougher laws on advertising and packaging to curb consumption - even today one fifth of the adult population smokes. Smoking continues to kill around 100,000 Britons each year and unless smokers give up their habit, 100 million years of life will be lost in the UK, according to experts. Channel 4 news reports on changing social norms and the battle to change behaviour. A good historical perspective on information gaps.
read more...»Drink, drink, more drink
Students are often asked to weigh up policies to limit the over consumption of demerit goods like alcoholic drinks. This BBC article cited by Ben White considers some of them.
Most governments have used a combination of policies with varying levels of success. One policy option is the use of variable rates of Excise Duty. The March 2011 budget resulted in a rise in the duty on strong beers (above 7.5% alcohol) of 25%, and the duty on weak beers (below 2.8%) cut by 50%.
read more...»10 Solutions to Binge Drinking
Last week David Cameron called binge drinking a “scandal” and referred to the negative externalities that are incurred by 3rd parties - in this case the NHS, to the tune of £2.7bn a year. He pledged to introduce drunk tanks whilst there are plans for a minimum price for alcohol.
read more...»Unit 1 Economics: Panorama - Poor America
For those of you who missed this week’s panorama “Poor America” it is well worth 30 minutes of your time. Students often assume that a high GDP per capita always leads to the good life for all- this programme highlights inequality well.
Video clip: Poor America: ‘Some kids are making ketchup soup’
The Panorama programme on America’s poor is available to view for the next 12 months - click here
read more...»Unit 4 Macro: Focus on India - Supply Side Issues
The rapid growth of the India economy has been helped by her economy enjoying a number of supply-side advantages. That said there remain structural supply-side weaknesses that will limit her continued competitiveness and development. This blog looks at the plusses and the minuses.
read more...»Unit1 Micro: Processed Meat and Cancer Risk - Information Failure?
I do my level best to avoid the processed meat aisles in the supermarkets - or at least the lower end of what is on offer (I remember once the 5pence sausage that was a guaranteed 2 per cent pork!). But perhaps excessive consumption of processed meats - much of which finds a way into the traditional Full-English might be doing people much more harm than good? Follow this BBC news report for more details.
read more...»Unit 2 Macro: A Widening Regional Divide in Life Expectancy
Life expectancy in the United Kingdom continues to improve. But one important aspect of the deep and structural divide in incomes, economic activity and status and health across different groups in Britain is the marked variation in average life expectancy for men and women. The UK Statistics Commission has just published new data on this covering the period 2004-2010 and finds that:
read more...»Scarce resources, immigration and the NHS
Our first few lessons with the new AS Economics students this year were based on the excellent NHS resources suggested by Ben Cahill and Geoff.
The class discussion that these generated was terrific, with the students coming up with a wide range of ideas and questions that led us through many aspects which they will cover in depth over the next two years. One issue was the scarcity of qualified doctors, and the opportunity that immigrant labour gives to increase the ‘labour’ factor of production, and so shift the production possibility boundary to the right - which also touched on regulation in terms of ensuring that doctors who have qualified abroad do match up to the high entry requirements and depth of study for UK medical students. So it will be interesting to discuss with that group today, reports on the BBC this morning that the General Medical Council is concerned that doctors who qualify abroad need more support and induction training on arrival in the UK.
One third of the doctors employed in the NHS qualified abroad. Without them, queues for the services the NHS provides would be much longer and we rely on them to expand the capacity of the service. The GMC’s report draws on a wide range of data including doctors’ surveys and patients’ complaints, and concludes that many overseas doctors have problems adjusting to a different cultural, ethical and professional environment in the UK. One example is the regulation by which the NHS is prevented under European law from providing language checks on doctors from the EEA. The reports also say that doctors need help in understanding how the NHS actually works, its structure and the interrelationships of the different bodies within the service.
It seems pretty extraordinary that an employer which employs 89,000 staff from overseas would not have thought of offering basic induction training when those staff first arrive - but putting that to one side, hopefully now that the issue has been raised, the employer will find use of resources to provide that training more efficient than dealing with the patient complaints and difficulties that the absence of the training creates
Starter Activity: Health Economics
This is a follow-up blog to Ben Cahill’s superb idea for a first lesson in economics focusing on making tough choices about resource use with a kidney dialysis machine. See: An activity for the first Economics lesson of the year!
I too will be using health care economics as a starter activity with my AS micro groups this year. I was interested in finding out some of the assumed costs of different health care treatments offered by the NHS and my research took me to published cost/price lists used by NHS Scotland. Drawing on a detailed spreadsheet I selected the following:
read more...»AS Micro: US ramps up cigarette warnings
This Washington Post article reports on a decision by the FDA in the United States to significantly ramp up the mandatory health warnings on cigarette packets. Starting next year, cigarette cartons, packs and advertising will feature graphic warnings, replacing the discreet admonitions that cigarette manufacturers have been required to offer since 1966. This follows a similar move by the Australian government a few months back. When will the UK government finally get the message?
Unit 1 Micro: Tackling Obesity - Alternative Approaches
So far, governments in the developed world seem to have failed in terms of developing and implementing effective policies that might reduce the negative externalities associated with the ‘obesity epidemic’. However, based on various different news reports this weekend, it seems that the private sector may actually have come up with some strategies that could be worth a try.
My favourite is the ‘pay what you weigh’ approach in a new style of restaurant in Brazil - the heavier the food on your plate, the higher the price. There’s an interesting short clip on this here.
Another approach, this time from Pizza Hut, is to offer unlimited free salad with all meals to all customers - apparently they expect to give away 50m cherry tomatoes and 1.3m million cucumbers over the next year!
And, whilst I haven’t yet seen evidence of this, there is, apparently, an agreement by supermarkets to include portions of vegetables in ready meals in order to help consumers to eat their recommended 5 a day.
Whether these approaches will actually make the nation healthier is unclear, but getting students to think of possible unintended consequences of this might be a useful pre-exam evaluative exercise.
read more...»AS Micro: Offering heart drugs by default
Should we screen for signs of disease or change the default and provide drugs as a default option beyond a certain age? In a fascinating new study, medics from the Wolfson Institute at Barts and the London Medical School have put forward the case for offering everyone statins over the age of 55 preventative as treatment for blood pressure and cholesterol - they claim that offering relieving drugs might prevent as many as 100,000 heart attacks and strokes each year in England and Wales alone. It is an interesting example of a cost-benefit approach when allocating health service spending.
read more...»Health Economics: Prescriptions Triple in 15 Years
The figures are staggering and raise important questions about the system of drug prescription in the UK. 886million prescriptions are now dispensed in the UK every year, at a cost of £8.5billion and the volume of drugs prescribed by GPs here has tripled over 15 years.
There are many factors behind this strong growth in drug use - rising population, growing incidence of obesity, diabetes and depression. But fundamentally it appears that GPs are too inclined to prescribe drugs to patients desperate for some relief. The danger is that over-prescription of drugs can lead to an increase in antibiotic resistant bacteria.
Timetric: Public Sector Employment
There is much debate and discussion about the Coalition government’s fiscal austerity programme and the tens of thousands of public sector jobs likely to be shed over the remainder of this Parliament. Our Timetric chart today shows total public sector employment and indicates that the jobs contraction has certainly started reversing a long time period of growth in state sector jobs. Much of the spike in numbers post 2007 came from the transfer of several commercial banks into state ownership in the wake of the global financial crisis. The biggest single employer in the public sector is the NHS - here a turning point in employment has begun.
read more...»The Placebo Effect Beautifully Visualised
A St David’s Day hat-tip to Henry Wingfield for spotting this superb visualisation of aspects of the placebo effect. It ties in quite nicely with Rory Sutherland’s placebo segment of his famous TED talk
Economics of health care reform
A hat tip to Diane Coyle for spotting this excellent podcast on the economics of reforms to the NHS - a discussion rich in the use of economic terms and one that might be a great teaching resource for AS micro students looking at aspects of health care markets and government intervention?
The Social Cost of Dementia
If dementia were a country it would be the world’s 18th largest economy - this is the estimated annual cost of coping with dementia according to a new World Alzheimer Report available here and reported here on the BBC news web site. The analysis highlights some of the economic and social consequences of the illness which itself is becoming more prevalent as average life expectancy rises year on year. Lost earnings incurred by people taking time off work to care for a loved one accounts for the bulk of dementia’s costs - and naturally this figure is much higher in richer nations than in countries with lower to middle incomes.
The report says that after age 65, the likelihood of developing dementia roughly doubles every five years.Alzheimer’s Disease International estimated that there are 35.6 million people living with dementia worldwide in 2010, increasing to 65.7 million by 2030 and 115.4 million by 2050. Nearly two-thirds live in low and middle income countries.
My AS Economics students are researching an assignment on the economics of health care - there is a supporting presentation here - and I am hoping that they will consider some of the steep costs of providing care for the elderly as part of their answer. It is a growing burden on the economy and one who global size is now considerable.
Scotland nudges towards minimum alcohol price
Here is a good 5-minute discussion here of the 45p a unit minimum alcohol price proposed in Scotland.
It offers a good application of some of the main AS micro topics - since it is targeting consumers for whom alcohol is a problem, the highly price inelastic demand for alcohol will probably mean the 45p minimum price is not a huge disincentive.
Paradoxically, since minimum prices only work if the free market equilibrium price is currenly below the minimum price, what it may actually cause is a shift towards higher strength alcohols that are already above the 45p a unit! There’s the law of unintended consequences for you!
Greece smoking ban
A new law has come into force this week in Greece banning smoking in enclosed public spaces and tobacco advertising.
It is estimated that more than 40% of Greek adults smoke - well above the EU’s average of 29% - which is perhaps why at a time of fiscal austerity, it is surprising/impressive that the Greek government have pursued this policy. Cigarettes bring in a significant amount of tax revenue (either via indirect or corporation taxes) which will be lost. But then maybe it will save a lot more money via its health bill. (or maybe they are just hoping people will flaunt the rules and collect fines!).
Having said this, this latest attempt to stop smokers, is its 4th attempt in a decade - following a tobacco ban in public places on July 1 of this year too. The demand for habit-forming goods is too inelastic to go away overnight…
Drug rationing - the role of NICE
The National Institute for Clinical Excellence (NICE) was created in 1999 and given the task of making decisions about which types of drugs ought to be made available through the National Health Service. One of their main aims is to ensure a standardised level of medical care throughout the country and minimise the risk of postcode prescriptions - where healthcare seems to be determined by where someone lives rather than their clinical need.
read more...»Health economics
A good article in the Economist on the market (failure) in healthcare vis-a-vis organ donation.
Spare swine flu vaccine - government failure or good planning?
Is this an example of government failure, or good planning?
The answer to that probably lies in the future, next winter, when we will discover whether the buffer stocks of 34 million unused swine flu jabs is needed or not.
In the emergency last summer the government contracted to buy 120 million jabs from the two manufacturers, GlaxoSmith Kline and Baxter, but then reduced the order to just 44 million as the emergency petered out. Only 6million of those have actually been used, nearly 4 million are being given to the World Health Organisation for use in Africa, leaving 34 million on the shelf.
read more...»OFT report finds welfare gains from liberalising pharmacies
The OFT has produced a new report looking at some of the welfare and efficiency effects of the decision to liberalise the retail pharmacy industry in the UK. The report finds that “Partial liberalisation of the pharmacies market has brought significant benefits for consumers, including shorter waiting times, a greater choice of pharmacies and extended opening hours….the number of pharmacies operating in England has risen by nearly nine percent. Fears that enabling easier entry would lead to large numbers closing have so far proven unfounded.”
The wider availability of supermarket pharmacies on spending by consumers on over the counter medicines has led to conservatively estimated annual savings of around £5m. In the UK retailers have been free to set their own price since resale price maintenance (RPM) on branded OTCs such as pain killers and flu relief tablets was abolished in 2001.
The largest share of any one company is now that of Boots (18.3 per cent), following the merger with Alliance Unichem (owner of Moss Pharmacies) to form Alliance Boots in 2006. In-store supermarket pharmacies – account for almost 7 per cent of the total.
Free health care and government failure
A hat tip to my colleague Tom Allen for spotting this great example in a recent Times article of the untintended consequences of providing the bulk of NHS care free at the point of need. Tom writes:
There was also an excellent article in the Times about the government of providing health care at zero price.
“20% of visits to GPs are for coughs and common colds. This costs the NHS £2bn a year, without making any difference to people’s health.The NHS has become a victim of demand-led culture…. £10 per visit should be enough to deter people with sniffles.”
Here is the rest of the article: Of course demand for GPs is too high — a visit costs zero
Labour Peer attacks free care for the elderly
This is a really interesting comment piece by the Labour Peer and Economist David Lipsey who attacks the government’s plans for free care for the elderly. It builds the case that offering free care will generate a number of unintended consequences and risks leading to government failure. It could be a useful article to include when teaching health care and government intervention.
“Every now and again governments pass laws that make you think they must have lost their marbles. Think of the Poll Tax and Dangerous Dogs Bill. But these errors by past administrations pale into insignificance beside the grotesque folly of the Personal Care at Home Bill, which is being debated in the House of Lords….....You don’t need to be much of an economist to know that if you reduce the price of something to zero, the quantity demanded will rise. As Adass also points out, the effect of free care will be that large numbers of people who are at present managing with the support of friends and relatives will start claiming for paid-for support…..”
The £4bn tax loss from counterfeit ciggies
A good investigation here into the rapid growth of the counterfeit cigarette market in the UK…
read more...»NHS: Govt failure?
The NHS is back at the centre of hot debate again this weekend, as the Dr Foster report findings generate differences of opinions.
read more...»
