Academic journal article Journal of Community Positive Practices

Social Costs Related to Policy Decisions in Health Care

Academic journal article Journal of Community Positive Practices

Social Costs Related to Policy Decisions in Health Care

Article excerpt

What social costs in health are?

Economical definitions of term refer to social cost as a cost to society as a result of an action or a policy change. It includes negative externalities (Glossary of International Economics, 2014), i.e. those negative consequences, the cost being borne by society.

Nash C. A. talks about a social cost for alternatives to action in relation to social policy outcomes (Nash C. A., in Pearce W. D., 2013, p. 8-30). According to him, social cost measurement theory has been at the center of controversies over the last decades, and debates have focused on the divergence of social / private costs and implications for the role of the state in a market economy, but also on the principles on which social cost measurement are based.

The difference between private and social costs implies, according to Nash (apud Pearce, 2013), accepts that individuals will ignore certain costs for society in their decisions, in order to make profit or seek their own utility. State intervention is therefore needed to limit these costs. One of the means can be the use of taxes and subsidies, but also other types of policies. However, in order to impose such taxes it is necessary to measure the social costs. The author wonders if the use of cost-benefit analysis is enough to measure them.

Debates on negative externalities have gradually emerged, along with the economic growth in the past decades and the need for the state's involvement in reducing them. With the development of the welfare state, a consensus has been built in Europe that the excesses (or externalities) of the market economy must be reduced and provide citizens a certain degree of security, a vision based on the assumption that the state has resources to provide social services and centralized and affordable health services, because of the high price these services would have on the free market, and because the state has a vision of areas where it must act through health policy to improve health indicators.

Regulating demand and supply in health care

These issues cannot be left to be regulated only by demand and supply in the private market. Also, in Europe, there was a consensus that health should not be to a certain degree an object of consumption like any other for which to pay directly from your pocket, for a few reasons:

1. Health should not be a luxury. In the absence of insurers, the pocket payment of the care, request at the time of the purchase of the service may result in the consumer being unable to pay and health becomes a luxury.

2. There is an unpredictability of needs and costs in health care. The unpredictability of the needs makes it difficult to plan the costs. A young man should in principle have low needs, but the need for healthcare may arise. On the other hand, life in the 21st century implies certain risks to be ensured: traffic accidents, accidents at work etc.

3. Costs for treating a serious illness outweigh the savings of an average grade family if these costs should be paid out of the pocket.

4. There is a lack of knowledge about the services that should be purchased. Unlike buying a current consumer good, people have little knowledge of what they buy when health services are needed. There is an asymmetry of information between the buyer and the vendor. Even when they have the choice, patients choose between what the doctor proposes as variants. The request is therefore directed by the physician, not by the consumer. (Bodenheimer S.T., Grumbach K, 2009)

Health care has therefore been classified as a good for which the state has to intervene. Also in this category of intervention are all goods considered collective and social. Collective goods respond to two characteristics: the lack of exclusivity of supply and the absence of rivalry in terms of consumption. Among the collective assets, the epidemiological status of the population, the quality of the environment can be mentioned etc. …

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