The Economics of Public Health Care Reform in Advanced and Emerging Economies
Front Matter

Front Matter

David Coady, Benedict Clements, and Sanjeev Gupta
Published Date:
June 2012
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    © 2012 International Monetary Fund

    Cover design: IMF Multimedia Services Division

    Cover illustration: Design Army

    Typesetting: Maryland Composition, Inc.

    Cataloging-in-Publication Data

    The economics of public health care reform in advanced and emerging economies / editors, Benedict Clements, David Coady, and Sanjeev Gupta. – Washington, D.C. : International Monetary Fund, 2012.

    • p. ; cm.

    Includes bibliographical references.

    ISBN 978-1-61635-244-8

    1. Health care reform. 2. Health care reform—Developed countries. 3. Health care reform—Developing countries. 4. Health care reform—Case studies. I. Clements, Benedict J. II. Coady, David. III. Gupta, Sanjeev. IV. International Monetary Fund.

    RA384 .E26 2012

    Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its members.

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    The mandate of the International Monetary Fund is primarily focused on macroeconomic stability. While recognizing that the issue of health care reform has much broader implications, in this volume we look at health care reform through the lens of our mandate, focusing primarily on macroeconomic stability and—of special importance to us in the IMF’s Fiscal Affairs Department—on fiscal stability.

    Health care reform has key implications for fiscal stability. Public spending on health care has been a key driver of aggregate increases in public spending over the past 40 years. As discussed in this book, spending is projected to continue rising as a share of GDP unless reforms are undertaken to help break these trends. The projected increases in public health spending will take place at a time when most countries need to undertake large fiscal adjustments to help bring public debt ratios down to more prudent levels. In this light, public health care spending is indeed an important macro-fiscal issue. Moderating the growth of age-related spending, including on health, will have to be a major element of the fiscal consolidation strategy in the advanced economies over the coming years. For many emerging economies, the outlook for health spending is better, and immediate pressures are expected to be more benign. But it will by no means be easy for emerging economies to expand access to and improve the quality of health care services in light of the limited fiscal space to increase public health spending.

    Despite the fiscal importance of health care reform, there has been relatively little systematic work on the macro-fiscal implications of reforms in advanced economies and emerging markets. Recent work by the Fiscal Affairs Department has tried to fill that void, both by projecting future health care spending if current policies were to be maintained and by estimating the potential fiscal impact of various reform options to contain health spending growth. This book draws on a recent study on the macro-fiscal implications of health care reforms presented to the IMF Executive Board in January 2011 and on papers prepared by outside experts for conferences at the IMF Regional Offices for Europe and Asia and the Pacific in June 2011 and October 2011, respectively.

    An important objective of the IMF’s analytical work in this area—and of our continued dialogue with health experts—is to improve our understanding of how feasible it would be to slow down the projected growth of health spending. This, in turn, has an important bearing on the composition of fiscal consolidation strategies going forward, since insufficient scope for containing health spending increases would shift the burden of expenditure cuts to other areas or require revenues to increase.

    Health care reform is a difficult policy issue. It involves complex trade-offs between policy goals, such as ensuring access to high-quality health care and keeping public spending at fiscally affordable levels. Preferences regarding the role of the state in the provision and financing of health care services also vary significantly across countries. Many of these issues go beyond the scope of our work in this area. However, with a combination of cross-country analyses and case studies—and not least based on the stimulating debate within and outside the IMF on these issues—this book identifies potential policy responses to contain public health spending pressures in an efficient and equitable manner. Of course, much remains for us to learn, and the IMF will continue to stay abreast of new developments and insights in this complex area of policy.

    Carlo Cottarelli


    Fiscal Affairs Department

    International Monetary Fund


    We first would like to thank the contributing authors. Without their hard work and dedication, this book would not have been possible. The book has also benefited from the comments of staff in the IMF’s Fiscal Affairs Department, staff in other IMF departments, and seminar participants from the European Commission, the World Bank, and the Organization for Economic Cooperation and Development. Many of the chapters in this volume were presented as papers at IMF health conferences in Paris in June 2011 and Tokyo in October 2011. We would like to thank conference participants for their valuable comments.

    We are grateful to Joanne Blake and Michael Harrup of the IMF’s External Relations Department for managing the production of the book. We are thankful to Pierre Jean Albert, Jeffrey Pichocki, and Mileva Radisavljevic, staff in the Fiscal Affairs Department’s Expenditure Policy Division, for their support throughout the entire process. We are also grateful to Baoping Shang—who worked with us from the beginning when the book project was conceived—for his written contributions and efforts to ensure that all steps in the production process were followed in a timely manner.

    Benedict Clements

    David Coady

    Sanjeev Gupta



    Arzneimittelmarktneuordnungsgesetz (law regulating reimbursement for drugs) (Germany)


    Association of Southeast Asian Nations


    Bureau of National Health Insurance (Taiwan Province of China)


    compound annual growth rate


    cyclically adjusted primary balance


    consumer-directed health care


    Children’s Health Insurance Program (United States)


    Civil Servant Medical Benefit Scheme (Thailand)


    disability-adjusted life-year


    data envelopment analysis


    disease management program


    diagnosis-related group


    East Asia and the Pacific


    excess cost growth


    free disposable hull

    G2 NHI

    Second-Generation National Health Insurance (Taiwan Province of China)


    Gemeinsamer Bundesausschuss (Federal Joint Committee) (Germany)


    general practitioner


    gross state domestic product (India)


    Health Insurance Fund (Hungary)


    Health Insurance System Research Office (Thailand)


    Health Intervention and Technology Assessment Program (Thailand)


    health maintenance organization


    health savings account


    Health Systems Research Institute (Thailand)


    International Health Policy Program (Thailand)


    Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (Institute for Quality and Efficiency in Health Care) (Germany)


    long-term care


    noncommunicable disease


    National Health Account (Thailand)


    national health insurance


    National Health Insurance (Japan, Taiwan Province of China)


    National Health Insurance Corporation (Republic of Korea)


    National Health Service (U.K.)


    National Rural Health Mission (India)


    Organization for Economic Cooperation and Development


    ordinary least squares


    out of pocket


    Popular Health Insurance (Mexico)


    purchasing power parity


    quality-adjusted life-year


    Rashtriya Swastya Bima Yojana (health insurance scheme for those below the poverty line) (India)


    statutory health insurance


    social health insurance (Thailand)


    universal health coverage


    World Health Organization

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