Estimating the marginal value of public expenditure on health and social care
Estimating the marginal value of public expenditure on health and social care
Theme 5: Empirical work on the marginal productivity of public expenditure in health and care
An estimate of the range of the beneficial effects of changes in public expenditure on health and social care will provide, for the first time, an estimate of the MVPF across and within each of these two categories of public expenditure. An estimate of MVPF is important for a wide range of resource allocation decisions, including the overall level of public expenditure, as well as its allocation across and within sectors. When combined with estimates of the non marginal effects of these different categories of expenditure, the benefits of any proposed change in public expenditure and its allocation can be assessed. As well as reflecting the additional beneficial outcome that could be gained with additional resources, it also reflects the benefits forgone if current resources are committed to specific investments and policies. Therefore, this work will also provide a more complete picture of the range of opportunity costs of investing in specific projects or committing different types of public expenditure.
The overall aim of the project is to build on the firm foundations provided by existing work on the marginal productivity of NHS and ASC expenditure by extending the analysis to include a range of other beneficial effects. These include the interactions between NHS and ASC expenditure, the impact on carers and on paid production in the wider economy. We will also examine how these beneficial effects tend to be distributed, informing an assessment of the likely equity impact of changes in public expenditure and how it is allocated.
Francesco Longo, Andrea Salas Ortiz, Karl Claxton, James Lomas
Francesco Longo francesco.longo@york.ac.uk
Background:
An estimate of how changes in public expenditure on health (NHS) and adult social care (ASC) affects a range of important outcomes for patients/recipients and carers, as well as the impact on the wider economy, is important for a wide range of policy decisions about how public resources are used.
Aims and objectives:
The key aim of this project is to bring together the empirical research developed so far, while filling some important empirical gaps. It will build on the firm foundations provided by existing work on the effects of relatively small changes in NHS and ASC expenditure to provide a more complete picture of the value of these two important types of public expenditure.
Methods:
This will require extending existing analyses in a number of ways including: i) estimating the impact of changes in NHS expenditure on carers and on paid production in the wider economy; ii) identifying how changes in NHS expenditure affects ASC expenditure and outcomes, and how changes in ASC expenditure affects NHS outcomes and expenditure; iii) estimating the effects of larger changes NHS and ASC expenditure, which can start to inform the likely benefits of more significant increases in public expenditure; and iv) how these beneficial effects tend to be distributed between different groups in the population, informing an assessment of the likely equity impact of changes in public expenditure and how it is allocated.
Policy relevance & dissemination:
These estimates of the range of the beneficial effects of changes in public expenditure on health and social care will provide, for the first time, an estimate of the marginal value of public funds (MVPF) across and within each of these two types of public expenditure. An estimate of MVPF is important for a wide range of policy decisions about resource allocation, including the overall level of public expenditure, as well as its allocation across and within sectors. When combined with estimates of the effect of larger changes in these different types of expenditure, the benefits of any proposed change in public expenditure and its allocation can be assessed. As well as reflecting the value of additional beneficial outcomes that could be gained with increases in expenditure, it also reflects the benefits forgone (opportunity costs) if current resources are committed to specific investments and policies. Therefore, this work will also provide a more complete picture of the range of opportunity costs of investing in specific projects or committing different types of public expenditure in different ways.