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<DIV><B>From:</B> <A title=ruglucia@PAHO.ORG
href="mailto:ruglucia@PAHO.ORG">Ruggiero, Mrs. Ana Lucia (WDC)</A> </DIV>
<DIV> <A title=EQUIDAD@LISTSERV.PAHO.ORG
href="mailto:EQUIDAD@LISTSERV.PAHO.ORG">EQUIDAD@LISTSERV.PAHO.ORG</A> </DIV>
<DIV style="FONT: 10pt arial"><BR> </DIV>
<DIV class=Section1>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#993300
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #993300; FONT-FAMILY: Arial">What
Should Macroeconomists Know about Health Care
Policy?<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><I><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-STYLE: italic; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></I></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><I><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-STYLE: italic; FONT-FAMILY: Arial">William
Hsiao, is</SPAN></FONT></I><FONT face=Arial color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"> K.T. Li Professor
of Economics and Director of the Program in Health Care Financing at the
<st1:PlaceType w:st="on">School</st1:PlaceType> of <st1:PlaceName
w:st="on">Public Health</st1:PlaceName>, <st1:place w:st="on"><st1:PlaceName
w:st="on">Harvard</st1:PlaceName> <st1:PlaceType
w:st="on">University</st1:PlaceType></st1:place><BR><I><SPAN
style="FONT-STYLE: italic">Peter S. Heller,</SPAN></I> former Deputy Director,
Fiscal Affairs Department of the International Monetary Fund.
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">International
Monetary Fund WP/07/13 – January 2007 <o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Available online as
PDF file [123p.] at: <A
href="http://www.imf.org/external/pubs/ft/wp/2007/wp0713.pdf"><FONT
color=#333399><SPAN
style="COLOR: #333399">http://www.imf.org/external/pubs/ft/wp/2007/wp0713.pdf</SPAN></FONT></A>
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">“……..Health care has
gained prominent recognition in development. The UN Millennium Development Goals
(MDG) set 10 specific targets to be achieved by 2015, of which three explicitly
pertain to health. Research studies document that millions of households in
developing nations are impoverished each year by health expenditures, retarding
poverty alleviation efforts, and an emerging body of research shows that
investments in health can have a significant effect on economic development
(</SPAN></FONT><FONT face=Arial color=#333399 size=1><SPAN
style="FONT-SIZE: 8pt; COLOR: #333399; FONT-FAMILY: Arial">Fogel, 2004; Bloom
and Canning, 2000; and Bloom, Canning, and Sevilla, 2004</SPAN></FONT><FONT
face=Arial color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">). HIV/AIDS has
undermined the development prospects of a number of African countries and
threatens to weaken the growth momentum of several important Asian economies.
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">For
middle-income, transition economies, and industrial countries, the challenges
posed by the health sector for macroeconomists differs, but is no less daunting.
Increasingly, pressures emerging from the health sector—in part due to the aging
of populations and in part due to the rapid pace of technological change in the
medical sector—are affecting fiscal sustainability, inflation, and possibly even
the current account of the balance of payments.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">For
those working in the health sector, it is also obvious that macroeconomic
policies can have a measurable impact on health care. Macroeconomic guidelines
relating to public expenditure targets, inflation control, tax policy, and
exchange rates will have effects on the provision of health care and ultimately
on the health status of the population (</SPAN></FONT><FONT face=Arial
color=#333399 size=1><SPAN
style="FONT-SIZE: 8pt; COLOR: #333399; FONT-FAMILY: Arial">Glied and Remler,
2002</SPAN></FONT><FONT face=Arial color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">). Since a large
share of health funding comes from the government, fiscal targets will constrain
how much a government can spend on health. Tax policies relating to tobacco,
alcohol, and firearms will influence people’s demand for these products
and<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">ultimately their
health (</SPAN></FONT><FONT face=Arial color=#333399 size=1><SPAN
style="FONT-SIZE: 8pt; COLOR: #333399; FONT-FAMILY: Arial">Jha and Chaloupka,
1999</SPAN></FONT><FONT face=Arial color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">). And the exchange
rate will be a factor determining the cost of vaccines and drugs.
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Macroeconomists
concerned with the fiscal balance will also influence decisions on the
respective roles to be played by government and private markets in the health
sector. Such decisions will influence the pace of health cost inflation, the
efficiency and quality of health care, and the degree of equity associated with
its financing.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">This
primer represents an effort to bridge the divide, enabling particularly
macroeconomists to obtain at least a basic understanding of the key health
policy and health system issues that may arise which are integral to their
understanding of the macroeconomy…..”<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Contents
<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">I.
Introduction and Guide<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">A. The
Need for a Guide for Macroeconomists<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">B.
Unique Characteristics of Health and Health Systems<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">C.
Challenges and Issues<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">D.
General Findings and Policy Actions<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">E. Road
Map to the Primer <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">II.
Why Macroeconomists Must Understand Health
Issues<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">III.
Facts and Myths about Health Care and Health Sector
<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">A.
Basic Facts about the Health Sector<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">B.
Myths about Health Care Systems <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">C.
Basic Health Economics: Health Markets and Market Failures
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">IV.
Health Policy Challenges and Issues Confronting Nations
<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">A.
Major Issues Confronting All Nations <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">B.
Challenges Facing Advanced Economies <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">C.
Challenges Facing Middle-Income Countries<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">D.
Challenges Facing Low-Income Countries<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">V.
A Conceptual Framework for Classifying Health Systems
<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">A.
Ends: Objectives <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">B.
Means: Structural Elements <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">C.
Control Knobs for Policy <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">VI.
Stages of Health System Development and Their
Performance<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">VII.
What Role Can Macroeconomists Play? <o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">A.
Low-Income Countries <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 1in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">B.
Middle-Income, Transition, and Advanced Economies<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">References<BR>Tables<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P></DIV></BODY></HTML>