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the economic soundness of a nation’s health care system in a matter-of-fact manner.
Specifically, we combine two components—one, an indicator of the burden that a country’s health
care system places on the nations economy and two, public commitment to health care coverage.
We measure the “burden” by establishing a ratio of the cost of health care, in any country, as a
percentage of that country’s Gross Domestic Product (GDP). The second component, the level
of public commitment to provide health care, is measured as the percentage of total health care
expenditures that is provided for or covered by a nation’s government.
For each nation, we use values for 2001 as provided by the World Health Organization,
and divide the relative cost of health care as a percentage of GDP by the government’s share of
the cost (or alternatively the government’s relatively commitment to health care). The values we
obtain, we believe, give us an indicator of health care “efficiency.” Specifically, the measure
indicates how much money is being spent relative to the government’s commitment to provide
health care for citizens. For instance, if country X spends 10% of GDP for health care and the
public financial commitment to provide health care is 100% of healthcare expenditures our
indicator would equal .1 (.10/1.0). Alternatively, if country Y spent 10% of GDP for health care
but the government portion is only 50% of total expenditures the measure would equal .2
(.10/.50). We consider Y’s health care system to be financially less efficient. That is to say, in
country Y, there is the same relative amount of money being spent on health care, but the public
investment suggests that only half as many people would have government-sponsored health
care provided to them. In the first instance, the public commitment is complete (100%), but no
more money is actually being spent. Country X gets more for its health care dollar—spending
only 10% of GDP the government covers all health care expenditures. The hypothesis, then, is
that a country with a more economically challenged (economically inefficient) health care system
will be more likely to adopt PAS.
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It is important to note that our indicator is not intended to measure the relative quality of health care in a country. In fact,
when quality creates additional financial burdens it may be inversely related to our indicator.
Convention