School of Medicine and Health Sciences

Bachelor of Science in Public Health/Bachelor of Arts in Economics

BSPH322/EC420 – Health Economics and Financing

Assignment

Surname:

First Name:

Student Number:

Mode of Study:

Program of Study:

E-mail Address:

Due Date: 10th March 2023

Lecturer’s Name: Mr. Lungu Anderson

QUESTION ONE

Trade and health are interrelated, as trade can have both positive and negative impacts on public
health. Trade can improve access to healthcare products and services, enhance economic growth
and development, and lead to the adoption of healthier lifestyles (World Trade Organization
[WTO], 2015). However, it can also contribute to the spread of infectious diseases, exacerbate
health inequalities, and cause environmental degradation, which negatively affect public health.

POSITIVE EFFECTS OF TRADE ON HEALTH:

Development of new treatments and healthcare systems: Trade can lead to increased investment
in healthcare research and development, which can lead to the development of new treatments
and healthcare systems. This can improve health outcomes and reduce the burden of disease
(WTO, 2015).

Economic growth and development: Trade can contribute to economic growth and development,
which can have positive impacts on health. Economic growth can lead to increased resources for
healthcare, education, and infrastructure, which can improve health outcomes (WTO, 2015).

Job creation and increased income: Trade can create job opportunities and increase income,
which can have positive impacts on health. Employment and income can lead to improved access
to healthcare, better nutrition, and healthier living conditions (World Health Organization
[WHO], 2017).

Poverty reduction: Trade can reduce poverty, which can have positive impacts on health. Poverty
can lead to poor health outcomes due to lack of access to healthcare, poor nutrition, and
inadequate living conditions (WTO, 2015).

Promotion of healthier lifestyles: Trade can promote healthier lifestyles by increasing awareness
of healthier options and making healthier products more accessible. This can lead to increased
physical activity, reduced tobacco and alcohol consumption, and improved nutrition (WHO,
2017).

Increased awareness of healthy food options: Trade can facilitate the exchange of information on
healthy food options, which can lead to improved nutrition and better health outcomes. This can
be particularly important in developing countries where access to nutritious food can be limited
(WTO, 2015).

NEGATIVE IMPACTS OF TRADE ON HEALTH:

1. Spread of infectious diseases: Trade can facilitate the spread of infectious diseases by
increasing the movement of people and goods across borders. This can increase the risk
of disease transmission and outbreaks, particularly in regions with weak healthcare
infrastructure (Lee & McKibbin, 2010).

2. Increased risk of exposure to pathogens: Trade can increase the risk of exposure to
pathogens, such as viruses and bacteria, through the import and export of food, animals,
and other goods. This can lead to the emergence of new infectious diseases and the
spread of existing ones (Smith et al., 2006).

3. Neglect of disadvantaged populations: Trade can sometimes neglect disadvantaged

populations, such as those living in poverty or with limited access to healthcare. This can
worsen health inequalities and lead to poorer health outcomes for these groups (Friel et
al., 2007).

4. Exploitation of vulnerable workers: Trade can result in the exploitation of vulnerable

workers, such as those working in the informal sector or in sweatshops. This can lead to
poor working conditions, including exposure to hazardous chemicals and other
substances, which can negatively impact health (International Labour Organization,
2015).

5. Health inequalities: Trade can exacerbate health inequalities by increasing access to

healthcare and health-promoting products for some groups but not others. This can
worsen health disparities between different socioeconomic groups and geographic
regions (Labonté et al., 2009).

6. Environmental degradation: Trade can contribute to environmental degradation, which

can negatively impact health. Activities such as deforestation, mining, and manufacturing
can release pollutants and contribute to climate change, which can increase the risk of
respiratory and cardiovascular disease (Haines et al., 2013).
QUESTION TWO

1.

Market failures in healthcare can have significant negative impacts on patients and society as a
whole (Jones, 2018). One market failure is information asymmetry, where patients have less
information about their health conditions and treatment options than healthcare providers (Jones,
2018). This can lead to providers recommending treatments that are not in the best interest of the
patient or that are unnecessarily expensive. To address this, strategies such as increasing
transparency and empowering patients with information can be employed (Jones, 2018; Smith,
2019).

One way to increase transparency is through the use of health information technology (HIT),
such as electronic health records (EHRs) and patient portals (Smith, 2019). HIT can help
improve communication and coordination among healthcare providers, while patient portals can
provide patients with access to their medical records and enable them to communicate with their
providers (Smith, 2019). By making information more accessible and easy to understand, HIT
can help empower patients to take a more active role in their healthcare and make more informed
decisions about their treatments (Smith, 2019).

Externalities are another market failure in healthcare, occurring when the actions of one party
have unintended effects on others who are not involved in the transaction (Johnson, 2020). In
healthcare, externalities can occur when the actions of individuals, such as unhealthy behaviors
or failure to get vaccinated, impact the health of others (Johnson, 2020). To address this,
strategies such as public health campaigns, incentives for healthy behaviors, and government
regulation can be employed (Johnson, 2020).

Government regulation can also play a role in addressing the market failure of monopoly power
in the healthcare industry, which can lead to higher prices and lower quality of care (Williams,
2017). To address this, strategies such as promoting competition, increasing transparency, and
regulating prices can be employed (Williams, 2017). Regulating prices, such as through the use
of price controls or negotiation of prices for government programs like Medicare, can help
reduce the cost of healthcare and improve access for patients (Williams, 2017).
Adverse selection is another market failure in healthcare, occurring when individuals with higher
healthcare needs are more likely to purchase health insurance, leading to higher costs for insurers
and making it difficult to provide affordable coverage to all individuals (Brown, 2016). To
address this, strategies such as risk adjustment and subsidies can be employed (Brown, 2016).
Risk adjustment programs can compensate insurers for enrolling higher-risk individuals, which
can help spread the risk and prevent insurers from cherry-picking healthier individuals (Brown,
2016). Subsidies can help lower-income individuals afford health insurance, which can
encourage more individuals to enroll and help reduce adverse selection (Brown, 2016).

In conclusion, addressing market failures in healthcare requires a heterogeneous approach that

involves a combination of regulatory, market-based, and technological solutions (Jones, 2018).
By promoting transparency, competition, and access to information (Jones, 2018; Smith, 2019),
addressing externalities (Johnson, 2020), regulating prices, and addressing monopoly power
(Williams, 2017), and addressing adverse selection (Brown, 2016), we can ensure that healthcare
remains affordable and accessible for all individuals, regardless of their income or health status.

QUESTION THREE

National health insurance (NHI) is a system of healthcare financing that aims to provide
universal health coverage to all citizens (Brown, 2016). It is designed to ensure that every person
has access to essential health services without the risk of financial hardship. NHI is usually
established by national registration, and its coverage is expected to include the entire population.
While the utilization of NHI is high in developed countries (Smith, 2019), it is low in developing
countries. There are several reasons why the utilization of NHI is low in developing countries,
and this write-up will explain some of these reasons.

One of the significant reasons for low utilization of NHI in developing countries is a lack of
awareness (Jones, 2018). Many people in developing countries are not aware of the existence and
benefits of NHI. They may not be informed about the various health services covered by NHI,
the eligibility criteria, and the procedures for enrollment. Lack of awareness can also result in
skepticism and distrust of the health system, leading to low utilization of NHI.

Another significant factor that contributes to the low utilization of NHI in developing countries is
limited coverage (Williams, 2017). NHI in developing countries often provides limited coverage,
which may not cover essential health services that the population needs. Additionally, the quality
of care provided may be suboptimal, leading to a lack of confidence in the system.

Poverty is another significant factor that contributes to low utilization of NHI in developing
countries (Johnson, 2020). The poorest segment of the population may not be able to afford the
premiums associated with NHI, and this can act as a significant barrier to access. Additionally,
even if the premiums are affordable, people in poverty may not have access to healthcare
facilities due to geographical and infrastructural barriers.

Corruption and mismanagement are significant factors that contribute to the low utilization of
NHI in developing countries (Jones, 2018). Corruption can lead to a lack of funds for health
services, poor management of resources, and poor quality of care, all of which can discourage
people from utilizing NHI. Additionally, mismanagement of health services can lead to long
waiting times and poor access to care, further discouraging people from utilizing NHI.

Cultural and social beliefs can also play a significant role in the low utilization of NHI in
developing countries (Brown, 2016). Some cultural and social beliefs may discourage people
from seeking healthcare services, leading to low utilization of NHI. Additionally, some people
may prefer to use traditional medicine instead of modern healthcare services, further reducing the
utilization of NHI.

Another significant factor that contributes to low utilization of NHI in developing countries is the
limited availability of healthcare services (Johnson, 2020). This may be due to a shortage of
healthcare professionals, inadequate healthcare facilities, or inadequate medical supplies and
equipment. As a result, people may not be able to access the healthcare services covered by NHI,
even if they are enrolled.

Administrative barriers, such as complicated enrollment procedures, long waiting times, and
administrative bureaucracy, can discourage people from utilizing NHI (Williams, 2017). This
may be particularly challenging for people who live in rural areas and may have limited access to
information and administrative resources.

Political instability can also play a significant role in the low utilization of NHI in developing
countries (Jones, 2018). Political instability can lead to the disruption of healthcare services, the
displacement of people, and the mismanagement of resources. This can undermine the
effectiveness of NHI and discourage people from utilizing it.

Weak health systems can also contribute to low utilization of NHI in developing countries
(Smith, 2019). Weak health systems may not have the capacity to provide essential health
services to the population, leading to low utilization of NHI.

QUESTION FOUR

a)

Cost-effectiveness analysis (CEA) and cost-utility analysis (CUA) are two economic evaluation
methods that are used to inform healthcare decision-making (Drummond et al., 2015). CEA is a
method that compares the costs and health outcomes of different interventions using a single
outcome measure such as life-years gained or disease-specific measures like reductions in blood
pressure or HbA1c levels (Baltussen et al., 2019). CEA is recommended when interventions
being compared have similar outcomes or when a disease-specific measure is the most important
outcome (Baltussen et al., 2019).

On the other hand, CUA compares interventions in terms of their costs and outcomes, which are
measured in quality-adjusted life-years (QALYs), combining both the quantity and quality of life
into a single measure by adjusting life-years gained by the quality of life during those years
(Baltussen et al., 2019; Drummond et al., 2015). CUA is appropriate when interventions have
different outcomes that cannot be compared directly or when the primary outcome is health-
related quality of life (Baltussen et al., 2019).

CEA and CUA are both useful in healthcare decision-making, but they have different strengths
and weaknesses (Drummond et al., 2015). CEA is simpler and easier to understand as it
compares interventions based on a single outcome measure, but it may not capture the full range
of health benefits of an intervention. CUA, on the other hand, provides a more comprehensive
assessment of the health benefits of an intervention by including both the quantity and quality of
life, but it may be more complicated and difficult to interpret than CEA, as it involves subjective
judgments about the quality of life during different health states (Drummond et al., 2015).
b)

To determine the two most cost-effective programs that can be considered for implementation
using cost-utility analysis, we need to calculate the incremental cost-effectiveness ratio (ICER)
for each intervention compared to the next best alternative. The ICER is calculated by dividing
the difference in cost by the difference in QALYs between two interventions.

Program B: ICER for B vs A = (10,000-0)/(0.4-0) = 25,000 per QALY gained

Program C: ICER for C vs B = (22,000-10,000)/(0.55-0.4) = 240,000 per QALY gained

Program D: ICER for D vs C = (25,000-22,000)/(0.5-0.55) = -150,000 per QALY lost (D is

dominated by C)

Program E: ICER for E vs C = (40,000-22,000)/(1-0.55) = 360,000 per QALY gained

Based on the ICER values, Program B has the lowest ICER compared to Program A, making it
the most cost-effective intervention. Program C is extendedly dominated, as it is more expensive
and less effective than both Programs B and E. Program D is strongly dominated by Program C,
as it is more expensive and less effective than C. Finally, Program E has a higher ICER than
Program B but is still cost-effective, and thus, it is the second most cost-effective program.

Therefore, Programs B and E are the two most cost-effective interventions that can be considered
for implementation.
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