Distributive systems of Economic Policy -...

Distributive systems of Economic PolicyPension, Healthcare, Education

Laszlo Gyorgy, [email protected] - http://mono.eik.bme.hu/~gyorgy/

mailto:[email protected]


http://mono.eik.bme.hu/~gyorgy/


Pension, the „Zero Sum Game”

SUM(Contributions)=SUM(Benefits)






GoalsReduce old age povertyUncrease (smooth) consumption in time

PENSION SYSTEM

Redu

ce o

ld a

ge p

over

ty

Smooth consumption in time

New Zealand, England

Australia

Singapore, Austria, Sweden

USA

Germany, France

Reasons

„Short sightedness” of employees

Moral hazard: people are eager to „overconsume” in their young age in their belief that they will be helped out in their old age

In traditional societies families care about their old members. As societies have been modernising some elderly people remained without care.

Risks of self-care: in the lack of secure financial markets people invested in property, stock, jewellery which are insecure in long term (because of wars, diseases etc.)


PENSION SYSTEM





Dominant Methods of Financing and Managing Pensions

Contributory scheme Non-contributory scheme: for those who cannot pay

contribution (e.g.: housewife, armed forces employee)Pay-as-you-go Fully funded

State (or social

security fund) managed

Hungary, Germany, France,

Singapore

Singapore (for armed forces and some gov. employees)

New Zealand (minimum sum scheme for all citizens)

Market (or company)

managedGM, Ford USA

These are just „guide-lines”, each system is a kind of mixedLaszlo Gyorgy, [email protected] - http://mono.eik.bme.hu/~gyorgy/

Financing

Managing





Pay-as-you-goPolitical riskAdministrative costs: 1,5% of contributions

Fully fundedMarket riskAdministrative costs (incl. capital adequacy, profit): 5-6%


PENSION SYSTEMFinancing: pros and cons





Three pillars of pay-as-you-go pension systems

Compulsory pay-as-you-go

Compulsory funded

Supplementary funded






Age tree in HungaryMen Women

DisabilityOld AgeLost Relatives

Age tree of pensioners in Hungary

Men Women

Current challenges and answers in the PAYG systems

Aging society: more pensioners less workers

Point system: to keep the contributions=benefits equation governments define pensions according to the contributions. Contributors are credited by points according to their contribution and will receive their pensions later according to the points collected. (Sweden, Poland)

Healthcare,the game of asymmetry






What makes you healthy?!

Quality of healthcare service Environmental factorsGenetic and biological makings Lifestyle

Features of healthcare as a restricted market

Health is a unical good (one would give any money for being healthy once gets ill)

Imperfect competition

Supply-oriented market (information asymmetry)

High inflation (in comparison with other markets) because of innovations in diagnostics and therapy

Service is usually paid in advance

The weird triangle of Financing sources, Providers and Clients






The TriangleHEALTHCARE

Insurance

Service

Money (direct)

Money

(social security contribution,

tax, insurance fee)

Applicati

on

Money

(vario

us te

chniq

ues o

f

finan

cing p

rovid

ers


CLIENT (consumer)

Healthcare Service PROVIDER

Third Party (FINANCER)






Financing methods in healthcare

Public financing Private financing

Social security system

Central budget

Private insurance

MSAOut-of-pocket

payments

Third-party payment type Direct and private





Health Care Systems HEALTHCARE

Dominant feature of financingDominant ownership of

providers Country examples

Public Financing (social security system and/or central budget)

Public ownership Sweden, Norway, UK

Public Financing Mixed ownership (public and private)

Germany, France

Mixed Financing(public and private financing

with similar weights)

Private Ownership USA, the Netherlands

Mixed Financing(public and private)

Mixed Ownership Singapore






40

50

60

70

80

Hea

lthy

life

expe

ctan

cy (y

ears

)

Facts and figures

Singapore Australia Canada France Germany Japan UK USA Hungary

Total expenditures on health (%GDP)GDP/capita

Healthy life expectancy (years)

16%

14%

12%

10%

8%

6%

4%

2%

0%

source: WHO, 2002; CIA World Fact Book, 2005

40e $

30e $

15e $

TEH: Total Expenditure on Health

PEH: Public Expenditure on Health


2002

TEH (%) PEH (%) PEH/TEH (%)

Australia 9.1 6.2 67.7

France 10 7.8 78.1

Germany 10.6 8.4 79.3

Hungary 7.7 5.4 70.2

Japan 7.9 6.4 81.5

Korea 5.3 2.7 50.6

Mexico 6.2 2.7 43.9

Netherlands 8.9 5.6 62.5

Spain 7.3 5.2 71.3

Sweden 9.1 7.7 85.1

Switzerland 11.1 6.7 54.9

UK 7.7 6.4 83.4

USA 14.6 6.6 44.8

Singapore 3.7 0.9 24





WHO healthcare rankings1 France

2 Italy

3 San Marino

4 Andorra

5 Malta

6 Singapore

7 Spain

8 Oman

9 Austria

10 Japan

11 Norway

12 Portugal

13 Monaco

14 Greece

15 Iceland

16 Luxembourg

17 Netherlands

18 United Kingdom

19 Ireland

20 Switzerland

21 Belgium

22 Colombia

23 Sweden

24 Cyprus

25 Germany

26 Saudi Arabia

27 United Arab Emirates

28 Israel

29 Morocco

30 Canada

31 Finland

32 Australia

33 Chile

34 Denmark

35 Dominica

36 Costa Rica

37 United States of America

38 Slovenia

39 Cuba

40 Brunei

41 New Zealand

42 Bahrain

43 Croatia

44 Qatar

45 Kuwait

46 Barbados

47 Thailand

48 Czech Republic

49 Malaysia

50 Poland

51 Dominican Republic

52 Tunisia

53 Jamaica

54 Venezuela

55 Albania

56 Seychelles

57 Paraguay

58 South Korea

59 Senegal

60 Philippines

61 Mexico

62 Slovakia

63 Egypt

64 Kazakhstan

65 Uruguay

66 Hungary

67 Trinidad and Tobago

68 Saint Lucia

69 Belize

70 Turkey

71 Nicaragua

72 Belarus

73 Lithuania

74 Saint Vincent and the Grenadines

75 Argentina

76 Sri Lanka

77 Estonia

78 Guatemala

79 Ukraine

80 Solomon Islands

81 Algeria

82 Palau

83 Jordan

84 Mauritius

85 Grenada

86 Antigua and Barbuda

87 Libya

88 Bangladesh

89 Macedonia

90 Bosnia-Herzegovina

91 Lebanon

92 Indonesia

93 Iran

94 Bahamas

95 Panama

96 Fiji

97 Benin

98 Nauru

99 Romania

100 Saint Kitts and Nevis

101 Moldova

102 Bulgaria

103 Iraq

104 Armenia

105 Latvia

106 Yugoslavia

107 Cook Islands

108 Syria

109 Azerbaijan

110 Suriname

111 Ecuador

112 India

113 Cape Verde

114 Georgia

115 El Salvador

116 Tonga

117 Uzbekistan

118 Comoros

119 Samoa

120 Yemen

121 Niue

122 Pakistan

123 Micronesia

124 Bhutan

125 Brazil

126 Bolivia

127 Vanuatu

128 Guyana

129 Peru

130 Russia

131 Honduras

132 Burkina Faso

133 Sao Tome and Principe

134 Sudan

135 Ghana

136 Tuvalu

137 Ivory Coast

138 Haiti

139 Gabon

140 Kenya

141 Marshall Islands

142 Kiribati

143 Burundi

144 China

145 Mongolia

146 Gambia

147 Maldives

148 Papua New Guinea

149 Uganda

150 Nepal

151 Kyrgystan

152 Togo

153 Turkmenistan

154 Tajikistan

155 Zimbabwe

156 Tanzania

157 Djibouti

158 Eritrea

159 Madagascar

160 Vietnam

161 Guinea

162 Mauritania

163 Mali

164 Cameroon

165 Laos

166 Congo

167 North Korea

168 Namibia

169 Botswana

170 Niger

171 Equatorial Guinea

172 Rwanda

173 Afghanistan

174 Cambodia

175 South Africa

176 Guinea-Bissau

177 Swaziland

178 Chad

179 Somalia

180 Ethiopia

181 Angola

182 Zambia

183 Lesotho

184 Mozambique

185 Malawi

186 Liberia

187 Nigeria

188 Democratic Republic of the Congo

189 Central African Republic

190 Myanmar

Text

http://www.photius.com/rankings/healthranks.html



EducationTwo GOALS:

1. raise HUMANS (for themselves) and for the society

2. educate “RESOURCES” for the economy






Education

Meritocratic or egalitarian?






Education

Ability developmental or factual knowledge driven?






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