Health
Research insight
INVITED EDITOR
Editorial from
Eduardo Costa
Adjunct Assistant Professor & Researcher at Nova SBE Health Economics & Management
November 16, 2022
3. Good health and well-being

3. Good health and well-being

Ensuring access to quality health and promoting well-being for all, at all ages
LEARN MORE

Rethinking public health spending sustainability

Keeping a growing healthcare system sustainable in developed economies might mean a raise in taxes or cost reducing actions in other sectors. How should a society and its governmental bodies reflect on its expenditure balance and priorities?

Health care spending has been increasing across developed economies over the last decades. Studies show that higher expenditures are linked with new technologies, innovation, productivity differences and population ageing. Forecasts suggest that health spending will keep on increasing in the next years. This fuels concerns regarding the sustainability of such growth.

A significant share of health spending is publicly financed. This means that individuals often do not pay for health care directly. Instead, the government acts on behalf of citizens, by collecting taxes and financing the health care sector. This entails translating society’s preferences into national budgets and public policies. Such translation is not easy. Even though elections are a channel through which voters are expected to reveal their preferences, not all choices are made explicitly by voters.

Arguing in favour of a larger share of health spending in national budgets implies deciding on how to finance such spending. Either taxes must increase (today or in the future, through debt accumulation), or some other public expenditures must be reduced.

Assuming constant taxes, the discussion on higher public health spending implies a decision on which type of public expenditure is more valuable. Economically, this implies a comparison on the marginal benefits of each type of expenditure. For instance, is the next euro better used in the public health care sector or in the public education system?

Permanently crowding out other forms of public expenditures to finance increasingly higher levels of public health spending is unlikely to be sustainable in the long run. This unsustainability arises from the fact that some public expenditures cannot be permanently reduced. Moreover, such extreme reductions would probably not reflect society’s preferences.

However, this does not mean that the mix between different types of public expenditures should be kept constant throughout time. For instance, sudden shifts in preferences can contribute to change the desired mix between public expenditures. Actually, research suggests that the COVID-19 pandemic might have shifted citizens’ preferences towards higher (permanent) levels of public health spending.

How can we be sure that these higher expenditure levels are financially sustainable? In the coming years, the debate on whether societies should spend more in public health spending should address three main issues. Firstly, should the increase in public health spending be used to substitute private health spending? Or should we aim to an overall increase in total health spending? Secondly, is there an increase in coverage and a broader range of services provided by public health systems? Does this reflect an actual increase in health services provision, or is it associated with a price effect? Finally, are citizens willing to pay higher taxes? If not, which other public expenditures should be crowd out to finance higher levels of public health spending?

The answers to these questions are not straightforward but will determine whether future increases in public health spending are financially sustainable or not. This implies establishing a large consensus in society on the financing mechanisms and the trade-offs in play. Are we collectively willing to pay for more and better health spending?

Eduardo Costa
Adjunct Assistant Professor & Researcher at Nova SBE Health Economics & Management
LEARN MORE
SHARE

Keep reading

Brown sugar, how come you taste so good?

More than 40 countries around the world have introduced or are considering introducing soda taxes. These instruments aim to reduce the consumption of products whose prices do not reflect their true social costs by making them comparatively more expensive. In Portugal, the soda tax is particularly interesting to study because there is a clear incentive for manufacturers of drinks with sugar content at or above the threshold to reformulate recipes and avoid paying the higher tax.

Rethinking public health spending sustainability

Keeping a growing healthcare system sustainable in developed economies might mean a raise in taxes or cost reducing actions in other sectors. How should a society and its governmental bodies reflect on its expenditure balance and priorities?

3D printing of your pills

We all know what a pharmacy is: a place where we can obtain chemical products, which we call pharmaceuticals. Not long ago, these products were manufactured at the pharmacy. With the proper scientific advances and the development of modern manufacturing processes, the pharmacy evolved into a place that mostly makes available such chemical products and helps people by counseling them. Pedro Pita Barros enlightened us on this topic.

Expanding leadership and management at medical schools: a must have – an opinion from a clinical perspective

Professionals in the field have demonstrated the need of better training to deal with the clinical reality. Should medical schools team-up with business schools to make their curricula more multidisciplinary?

THE CHOICES OF

BOLD Leadership: Nova SBE's Innovative Program for Future Leaders

In an era defined by rapid change and global challenges, the question of what it takes to be an outstanding leader in the 21st century becomes increasingly crucial. Nova School of Business and Economics (Nova SBE) has stepped up to address this query with its groundbreaking initiative: BOLD – Be an Outstanding Leader. This senior manager training program not only equips participants with essential skills but also aligns with the United Nations’ Sustainable Development Goal 16 (SDG 16), emphasizing the role of leadership in creating positive societal impact.

Subscribe our weekly newsletter

By subscribing to the Nova SBE Role to Play newsletter, you can stay up-to-date on the latest articles posted on the website.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

We all have a role to play

We are on a mission to be a community dedicated to the development of talent and knowledge that impacts the world.

With just ten years to go, an ambitious global effort is underway to deliver the 2030 promise. We want to take a stand and we are calling on our community to showcase how they are contributing to the 17 Sustainable Development Goals, whilst influencing more and more people to unravel their role to play.

Here, you will find four different ways your ideas can flourish, dialogue can be enhanced, and action can take place. You can choose one or all four, and Nova SBE will be there to support you all the way and guarantee tangible change.

We all have a role to play, and this is your way in.