A comparative analysis of some policy options to reduce rationing in the UK's NHS: Lessons from a general equilibrium model incorporating positive health effects

Abstract

This paper seeks to determine the macro-economic impacts of changes in health care provision. The resource allocation issues have been explored in theory, by applying the Rybczynski theorem, and empirically, using a computable general equilibrium (CGE) model for the UK with a detailed health component. From the theory, changes in non-health outputs are shown to depend on factor-bias and scale effects, the net effects generally being indeterminate. From the applied model, a rise in the National Health Service (NHS) budget is shown to yield overall welfare gains, which fall by two-thirds assuming health care-specific factors. A nominally equivalent migration policy yields even higher welfare gains.