Front Matter

Front Matter

Peter Heller, and William Hsiao
Published Date:
April 2007
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    © 2007 International Monetary Fund

    Production: IMF Multimedia Services Division

    Cover Design: Lai Oy Louie

    Typesetting: Alicia Etchebarne-Bourdin

    Cover Photo: ©Worldwide Rights/Northfoto

    Cataloging-in-Publication Data

    Hsiao, William C.

    What macroeconomists should know about health care policy/William C. Hsiao and Peter S. Heller.—Washington, D.C. : International Monetary Fund, [2007].

    • p. cm.

    Includes bibliographical references.

    ISBN 978-1-58906-618-2

    • 1. Medical economics. 2. Medical policy—Economic aspects. 3. Medical care—Economic aspects. I. Heller, Peter S. II. International Monetary Fund.

    RA410 .H753 2007

    Disclaimer: This publication should not be reported as representing the views or policies of the International Monetary Fund. The views expressed in this work are those of the authors and do not necessarily represent those of the IMF, its Executive Board, or its management.

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    Commission on Macroeconomics and Health (WHO)


    Diagnostic related group


    Gross domestic product


    Gross national income


    Human immunodeficiency virus/acquired immune deficiency syndrome


    International financial institution


    International Monetary Fund


    Low Income Countries Under Stress


    Millennium Development Goals


    Medical savings account


    National Health Account


    Organization for Economic Cooperation and Development




    Purchasing power parity


    Severe acute respiratory syndrome


    Social insurance


    United Nations


    World Health Organization


    Economic policymakers often measure their success solely by their country’s economic growth. As a result, they devote most of their time and efforts to thinking about macroeconomic policy issues, overlooking the way in which macroeconomic policy is influenced by and influences the social sectors—education, health, and income security. Over the past decades, structural adjustment policies have had a profound impact on the social sectors and on social development in low-income countries. And in many industrial countries, policymakers are increasingly aware that developments in the health and pension areas will create fiscal pressures that have implications for the macroeconomic policy framework.

    Although incorporating health concerns into macroeconomic policy (and vice versa) requires an understanding of health economics, macroeconomics and health economics are two distinct fields. Seldom does a specialist in one field have more than a modest understanding of the other. More important, macroeconomists and economic policymakers frequently assume that social sector policies should follow the free market strategy that has worked so well in fostering economic growth. This leads them to simply apply efficient market theory in devising policies related to the social sectors, thus ignoring the ways in which various market failures make such an approach undesirable.

    This primer is a step toward bridging the divide between macroeconomic policy and health policy. It aims to acquaint macroeconomists with some fundamental facts about the economics of health care and the major health issues confronting countries. It provides a perspective for examining a country’s health care system by suggesting some broad parameters that macroeconomists can use to evaluate a country’s health policy and the performance of its health system.

    This Special Issues paper has been made possible by the generous contributions of many people. The authors benefited greatly from discussions with Sanjeev Gupta of the IMF, and in particular from his insights into macroeconomic policy and social development. Other IMF economists offered insightful comments on the earlier version of this primer, including Juan Pablo Cordoba, Luis Cubeddu, Philip Gerson, Robert Gillingham, Thomas Richardson, Markus Haacker, and George Tsibouris. Philip Musgrove also provided valuable comments. Alexander Preker, George Schieber, and Kei Kawabata of the World Bank helped the authors focus on the major issues facing low-income and middle-income countries and contributed to the paper’s substance and empirical evidence. Finally, Yessica Alvarado provided superb secretarial skills in putting this paper to bed.

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