question 1

a) According to a study conducted by the World Bank, around 50% of health care financing in Sub-Saharan Africa comes from out-of-pocket payment paid by largely impoverished populations. Assume that the World Bank calls for a proposal to solve this problem and receives two policy recommendations: a) a "public solution" through direct public provision that requires the governments in these countries to allocate more funds to public hospitals; b) a "private solution" through private health insurance that requires the government in African countries to encourage the development of private health insurance markets. You are hired as a health economics expert to review these two proposals. What are your main comments on these two proposals from the vantage points of efficiency and equity? (7.5 marks) b) Suppose country A traditionally relies on out-of-pocket costs to finance personal health care services. Assume this country receives a substantial amount of foreign aid for its many infrastructure investments, hence the government can release public funds to finance personal health care services. Suppose the government decides to introduce an additional system of universal coverage through a single-payer program. Conceptually, what effect do you expect the introduction of universal health coverage to have on the demand and supply sides of the country's health care market? List at least two impacts on both sides of the health care market in Country A. Justify each effect you list. (7.5 marks)