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Governments have an enormous economic and political stake in the health of their populations. Population health is not only fundamental to economic growth but also affects short-term and long-term government expenditure on health care, disability, and other social programs and influences direct and indirect tax receipts. Fiscal transfers between citizen and state are mostly ignored in conventional welfare economics analyses based on the hypothesis that there are no winners or losers through transference of wealth. However, from the government perspective, this position is flawed, as disability costs and lost taxes attributed to poor health and reduced productive output represent real costs that pose budgetary and growth implications. To address the value of health and health care investments for government, we have developed a fiscal health analytic framework that captures how changes in morbidity and mortality influence tax revenue and transfer costs (e.g., disability, allowances, ongoing health costs). The framework can be used to evaluate the marginal impact of discrete investments or a mix of interventions in health care to inform governmental budgetary consequences. In this context, the framework can be considered as a fiscal budget impact and/or cost-benefit analysis model that accounts for how morbidity and mortality linked to specific programs represent both ongoing costs and tax revenue for government. Mathematical models identical to those used in cost-effectiveness analyses can be employed in fiscal analysis to reflect how disease progression influences public accounts (e.g., tax revenue and transfers).

Original publication

DOI

10.1016/j.jval.2016.11.018

Type

Journal article

Journal

Value Health

Publication Date

02/2017

Volume

20

Pages

273 - 277

Keywords

fiscal, health, public economics, public finance, welfare economics, Cost-Benefit Analysis, Delivery of Health Care, Financing, Government, Humans, Models, Economic, Morbidity, Mortality