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Extended-form Case Study
How relevant is microeconomic analysis to climate change and healthcare?
Published on December 31, 2019 15 min
Other Talks in the Series: Introduction to Microeconomics
What are the different types of costs and revenues?
- Dr. Sangaralingam Ramesh
- University College London, UK
Hi, I'm Dr. Sangaralingam Ramesh. This is talk number 15 in this Henry Stewart talk series, introduction to microeconomics. In this talk, we'll be looking at specific case studies related to climate change and healthcare, and seeking to answer questions such as, how relevant is microeconomic analysis to climate change in health care? In this final talk in the series, we'll be putting together some of the ideas that we've been developing throughout the talks in terms of the various economic concepts that we've been discussing and evaluating in the context of microeconomics.
In the case of healthcare in the United States and UK, we can consider some basic facts such as, healthcare spending being a large component of government expenditure. In the UK, the government spends about 140 billion pounds on the national health service, and health care costs are going up and waiting lists also going up. In the United States, the government spends money on Medicare for the elderly and on Medicaid for the poor by subsidizing access to these services. In many countries, healthcare costs are rising simply because people are living longer, people have unhealthy diet, and therefore, there are additional costs imposed on healthcare systems of these two countries. However, in the United States, the Affordable Healthcare Act of 2010 was passed in the United States to ensure that 40 million US citizens who had no access to healthcare were given access to healthcare by the US government subsidizing medical insurance.
So what are the consequences of rising healthcare? Firstly, government spending on healthcare is expected to increase. This is because of a rapidly aging population, people living longer, and also, the increasing costs of drugs and technology. Many of the drug companies spend billions and billions of dollars and pounds in developing new drugs, and there are new companies emerging, developing new technologies for hospitals. All of these new drugs and technologies have a large cost. So this means that the government has to spend money on buying drugs at market prices, and also the newly emerging technology at market prices. So this may also be another reason why government spending on healthcare is rising. So in this case, when the government doesn't have enough money to spend, it may have to borrow money from foreign central banks or foreign investors. As a result, this overtime will lead to increase in government debt. This reduces the government capacity to spend on other sectors of the economy, such as on providing education for the people of a country, very good policing service, new types of infrastructure, for example, which will also benefit the economy in terms of lower crime levels, easy access to markets in the context of better infrastructure.