outside the budget: the two approaches may yield similar public benefits but with widely different effects on spending and revenues; see Box 2-1. Disagreements about which approach to take are not differences about the value of health or about providing access to better care, but about the best way to do so.

People who believe that equity or fairness gives people first claim on the money they earn (or inherit) often favor smaller government: they therefore require that a strong case be made before the government takes money, usually through taxes, for public goods and purposes. Although they may believe it is appropriate for government to help people who have no or limited capacity to take care of themselves, they may demand a high level of proof of need. People with a strong view of individual claims also often see social benefit in asking people to exercise more personal responsibility. This view leads them to argue for relatively less spending on many social programs. They also are likely to believe that high marginal tax rates discourage private investment and work effort. They stress the inefficiency

BOX 2-1

Health: An Example of Values and Choices

For some people, health policy is about basic value choices: the extent of government’s responsibility for individuals’ physical well-being and what constitutes fairness in treating people of different means who face similar health problems. However, most health policy debates focus on more practical questions, such as:

  • How should the costs of health care be divided among individuals, their employers, and the government?

  • How should essential treatment or care be defined and paid for?

  • How should health care delivery be organized to reduce medical errors and save money?

Knowing how a person values health does not necessarily indicate that person’s stand on specific policy questions, such as whether the government should spend more or less on health care relative to other goals, or how to pay for it.

If the choice is to increase spending for health, it can be done in various ways. Larger subsidies for health can be added to the budget and paid for by increased revenues or increased borrowing. Or tax subsidies can be provided to employees by allowing their employers to exclude health insurance coverage for them from their business’s income, thus lowering their tax obligations. This is the equivalent of adding subsidies on the spending side of the budget, but it has the effect of reducing income tax revenues instead. Or the government may simply mandate that employers pay for their employees’ health care, without offering a subsidy. All these options may have the same effect on health care access and health, but only the first would increase the government’s direct spending on health.



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