edited case 1 macroeconomics and health the case of mexico

8/7/2019 EDITED Case 1 Macroeconomics and Health the Case of Mexico

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Macroeconomics and Health: The Case of Mexico

Case Analysis

FULLANTE, Ma. Khristine Abelinde January 17, 201111088230 Health Economics

The Macroeconomics and Health: The Case of Mexico presented a direct link

between health and economic growth. It generally states that the two go hand in hand in

a manner that economic growth simultaneously influences health care and vice-versa.

As Catherine Overholt and Margaret Saunders (1996) said, “Health status both affects

and is affected by macroeconomic phenomena, and the way that the national income is

spent affects the welfare of the population.”

Reading the case study, it can be concluded that the economy of Mexico was

able to withstand a high rate of economic growth during the late 1950’s and 1960’s.

Mexico’s Gross Domestic Product (GDP) grew high because of developing the domestic

market of the country. The strategy that the government used was very effective to the

Mexican economic development. In effect, the government was able to allocate enough

money for social expenditures. However, the considerable growth rate was not

maintained and as a result, it was insufficient to sustain the GDP per capita in the1980’s. Furthermore, the standard of living of a large group of population of Mexico has

remained stationary, if not depreciated.

Government intervention in the health care system of a country is important.

Santerre & Neun (2007) in their book Health Economics: Theories, Insights, and

Industry Studies presented a model describing the reasons for government intervention,

the public interest theory. According to the public interest theory, government takes the

role of promoting and amending policies for the enhancement of the efficiency andequity of the health care system of the country. Furthermore, public interest functions

when the government restores efficiency and promotes equity when there is market

failure. These are done through encouraging competition, providing consumer

information, reducing harmful externalities, or redistributing income in society (Santerre



& Neun, 2007). In the case of Mexico, the government had to cut and adjust their

budget for social expenditures to recover from the economic crisis. It includes reducing

food subsidies and supports only a particular population group. It also increased

minimum wage rate lower than the inflation, and devalued the peso.

Overholt and Saunders (1996) stated that “Lower economic growth results in

unemployment and lower incomes. With less income, people, particularly those at the

lowest income levels, experience deterioration in their diets and nutritional status and

increased morbidity.” This is true in Mexico. When the government made major budget

cuts in government social expenditures (health, education, and social security),

Mexicans experienced inadequate health care, lack of basic needs, and poor health

status such as malnutrition and other nutritional deficiencies. These were even more

worsened when a large amount of government budget was allotted for debt services.

As mandated in the Millennium Development Goal, the government should

provide universal access to health care. In the Philippine context, we have a

government initiated program that adopts key reform strategies in health financing,

regulation, services delivery, and governance of health services called Four mula One

for Health of the Department of Health. Along with this is securing public funds to

provide health insurance coverage to the poorest of the poor (Capuno & Kraft, 2010).

This may be a good program but, as we can see, the government fails to establish

policies that will provide quality and equitable health services to all. Our country still

lacks resources to fully realize the goal of the Four mula One for Health.

In realizing economic growth, a healthy population is needed as it is important in

alleviating poverty. Moreover, the case clearly stated the role of the government in

enhancing efficiency and equity in the country. Resources should be allocated efficiently

at all levels of the economy (Santerre & Neun, 2007). This could only be done throughthe development of policies supporting macroeconomic stability. With the effort of the

government, the most favorable socioeconomic conditions associated with better

income will apparently lead to better health outcomes.



References:

Capuno & Kraft. (2010). Household choices, circumstances and equity of access tobasic health and education services in the Philippines . University of the PhilippinesSchool of Economics. Retrieved fromhttp://www.sesc.econ.upd.edu.ph/dp/index.php/dp/article/view/667 on January 13,2010.

Overholt & Saunders. (1996). Policy Choices & Practical Problems in HealthEconomics . World Bank.

Santerre & Neun. (2006). Health Economics: Theories, Insights & Industry Studies .Thomas Learning Asia.

edited case 1 macroeconomics and health the case of mexico

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