GEP Research Paper 06/31
The Economic Impact of Health Care Provision: A General Equilibrium Assessment of Some Policy Options in the UK's NHS
Martine Rutten, Adam Blake and Geoffrey Reed
Abstract
This paper focuses on the macro-economic impacts of changes in health provision via its effects on the labour market. The resource allocation issues have been explored in theory, by further developing the Rybczynski theorem and empirically, using a Computable General Equilibrium model for the UK . From the theory, changes in non-health outputs are shown to depend on so-called factor-bias and scale effects. Using the CGE model with added real-life complexities, a rise in the NHS budget is shown to yield overall welfare gains, which fall by two-third assuming health-specific factors. A nominally equivalent migration policy yields even higher welfare gains.
Issued in October 2006.
This paper is available in PDF format .