ASSIGNMENT

Topic: Importance of Macroeconomics Indicators on Healthcare

Submitted by :
Name : Ahanaf Mozahid

Class : Second Year, Third Semester

Roll : 13

Session : 2021-2022

Subject : Health Economics

Course : HE 202

Course Name : Macroeconomics I

Date : 28January, 2024

Submitted to :
Suzana Karim
Assistant Professor
Institute Of Health Economics
University Of Dhaka
 Importance of Macroeconomics Indicators on Healthcare

Introduction

According to World Bank data the life expectancy rate of United States of America (USA) is 77.0
years. On the other hand, the life expectancy rate of Country Haiti is 63.19 which is pretty much
lower than the country USA. Why is the difference? Why are some countries healthier than others?
A clear initial consideration in our investigation is the recognition that countries with lower
economic status tend to exhibit lower average health outcomes. If we investigate the GDP (Gross
Domestic Production) per capita of both countries, the GDP per of USA is 70,219.47 USD and
Haiti is 1,823.74 USD. From this scenario we can make decisions that higher GDP indicates higher
health expectancy rate. So, in every country there is always an importance of macroeconomics
effects on health. Macroeconomic indicators are quantitative measures used to assess and analyze
the overall economic performance of a country or region. These indicators provide insights into
the broader economic trends, conditions, and health of an economy. Like the GDP, inflation rate,
unemployment rate, income inequality, poverty rate, education level, government spending on
healthcare has significant effect on healthcare. In this assignment, with some real-life examples
and studying secondary data, we will investigate the importance of macroeconomics indicators on
healthcare.

Macroeconomics Indicators and their Importance on Health

Macroeconomic indicators primarily focus on the overall performance of an economy, but it has
an important effect on healthcare of a country. Macroeconomic indicators play a significant role
in shaping public health outcomes. Some of the macroeconomics indicators are GDP, inflation
rate, unemployment rate, income inequality, poverty rate, education level, government spending
on healthcare which shapes the countries health outcomes. A growing Gross Domestic Product
(GDP) generally improves living standards and healthcare access, while high unemployment rates
can lead to financial strain and negative mental health impacts. Stable inflation ensures
affordability of healthcare and essentials. Government spending on healthcare is crucial, and
income equality correlates with better health across socioeconomic groups. Responsible
management of public debt enables sustained health investments, and trade balances contribute to
economic stability, indirectly affecting health through job creation and resource allocation.
Recognizing these connections is vital for formulating policies that promote comprehensive and
equitable well-being.

GDP (Gross Domestic Production) and Healthcare

The relationship between a nation's Gross Domestic Product (GDP) and its healthcare system is a
complex and multifaceted one. While economic prosperity often translates to better healthcare
outcomes, the pathway is not always linear, and cultural, political, and structural factors can
significantly influence the equation. This analysis delves into the interplay of GDP and healthcare
in the contrasting contexts of the United States and Iran, drawing insights from relevant research
and data.

The USA: A High-GDP, High-Cost Healthcare Paradox

The United States boasts the world's largest economy, with a GDP of $23.1 trillion in 2022 (World
Bank, 2023). Yet, its healthcare system faces numerous challenges, including high costs, limited
access, and disparities in quality. Despite spending over 17% of its GDP on healthcare, the US
ranks 27th in life expectancy among developed nations (OECD/Eurostat, 2023). This paradox is
attributed to factors like:

• Private-sector dominance: Unlike most developed countries, the US healthcare system

relies heavily on private insurance and for-profit hospitals, leading to higher costs and
uneven access.
• Administrative inefficiencies: The complex bureaucracy of the US healthcare system, with
multiple payers and providers, contributes to significant administrative overhead.
• Lack of universal coverage: Millions of Americans remain uninsured or underinsured,
leading to delayed or forgone care.

Iran: A Different Path to Healthcare Access

Iran, with a GDP of $1.8 trillion in 2022 (World Bank, 2023), presents a stark contrast. Despite
facing economic sanctions and resource limitations, Iran boasts a universal healthcare system that
provides basic coverage to all citizens. This system, established after the 1979 revolution,
emphasizes primary care and preventive medicine. While challenges like shortages of advanced
medical technology and brain drain exist, Iran has achieved impressive healthcare outcomes:

• Life expectancy: Iran ranks 76th globally in life expectancy, significantly higher than its
income level would suggest (OECD/Eurostat, 2023).
• Infant mortality: Iran's infant mortality rate is lower than its regional average, highlighting
the effectiveness of its primary care system.
• Vaccination coverage: Iran has achieved near-universal vaccination coverage for most
childhood diseases.
This analysis underscores the importance of considering not just GDP, but also the underlying
structure and priorities of a healthcare system. Effective healthcare depends on a well-designed
system that prioritizes access, efficiency, and preventive care, even within financial constraints.
Moving forward, nations should seek innovative solutions that balance economic realities with the
ethical imperative of ensuring good health for all.

The Bite of Inflation: Examining the Impact on Healthcare in the US and Iran

Inflation, the rising cost of goods and services, can bite into any budget, but its impact is
particularly sharp in the realm of healthcare. This essential sector is already plagued by high costs
and access issues, and inflation can exacerbate these challenges, leaving individuals and healthcare
systems struggling. Examining the situation in both the US and Iran, with their contrasting
healthcare landscapes, can offer valuable insights into the global repercussions of inflation on
health.

The US: A Costly Conundrum

The US healthcare system, known for its high costs and reliance on private insurance, is
particularly vulnerable to inflationary pressures. In 2023, healthcare costs in the US increased by
4.6%, outpacing overall inflation (2.9%). This rise is driven by multiple factors, including:

• Rising labor costs: Healthcare worker wages, particularly for nurses and specialists, are
increasing, driving up operational costs for hospitals and clinics.
• Drug prices: Prescription drug prices continue to climb, often exceeding inflation rates. In
2023, the average price of brand-name drugs in the US increased by 5.8%.
• Technological advancements: While new technologies can improve healthcare outcomes,
they often come with hefty price tags. The adoption of advanced medical equipment and
software adds to the overall cost burden.

These factors contribute to a growing burden on individual Americans. According to a 2023 Kaiser
Family Foundation survey, 30% of US adults report difficulty affording healthcare costs, even
with insurance. Inflation further hinders affordability, forcing patients to delay or forego necessary
care, potentially leading to worse health outcomes.

Iran: Sanctions Squeeze a Fragile System

Iran's healthcare system, while grappling with its own complexities, presents a contrasting picture.
The country boasts a universal healthcare system funded through a combination of taxes and
insurance contributions. However, this system faces significant challenges due to:

• Economic sanctions: Since 2018, US sanctions have significantly impacted Iran's

economy, restricting access to medical equipment, pharmaceuticals, and financial
resources for healthcare. This has led to shortages and rising costs of essential drugs and
supplies.
• Currency depreciation: The Iranian Rial has depreciated sharply against major currencies,
further inflating the cost of imported healthcare goods.
• Aging population: As with many countries, Iran faces an aging population, leading to
increased demand for healthcare services alongside limited resources.
The combined effect of inflation and sanctions creates a difficult situation for Iranians. Access to
essential healthcare services is at risk, with many relying on subsidized care or facing out-of-
pocket expenses they can barely afford.

Inflation casts a long shadow over healthcare, creating challenges for both developed and
developing countries. While the US struggles with affordability issues amid a private insurance-
driven system, Iran grapples with limited resources and the added burden of sanctions.
Understanding the nuanced impact of inflation across healthcare systems is crucial for developing
effective policies and mitigating its negative consequences. Investing in public health
infrastructure, promoting price transparency, and exploring alternative financing mechanisms can
pave the way for more equitable and resilient healthcare systems in the face of inflationary
pressures.

Income Inequality and its Impact on Healthcare:

Income inequality, the uneven distribution of wealth within a society, has significant implications
for various aspects of life, including healthcare. This analysis delves into the relationship between
income inequality and healthcare access and outcomes in two contrasting countries: the United
States (USA) and Iran. By examining statistical data, graphs, and relevant academic literature, we
can gain a deeper understanding of these complex dynamics in each nation.

USA

The USA grapples with a high degree of income inequality, reflected in a Gini coefficient of 0.39
(2019), one of the highest among developed nations. This means the top 10% of earners hold
around 41% of the national income, while the bottom 50% hold only 13%. This stark disparity
translates into unequal access and quality of healthcare.

Statistical Data

• Health insurance: 8.5% of Americans lack health insurance, leading to delayed or forgone
care, particularly among low-income individuals.
 • Preventive care: Low-income adults are less likely to receive preventive screenings for
diseases like cancer and heart disease, contributing to higher morbidity and mortality rates.
• Life expectancy: The USA has a lower life expectancy (79 years) than many developed
countries, with a significant gap between high- and low-income groups.

Iran

Iran, in contrast, presents a different picture. Although income inequality exists (Gini coefficient
0.38, 2019), its universal health insurance system, established in 2014, guarantees basic healthcare
access for all citizens. This system, funded through a combination of taxes and social contributions,
provides primary care, preventative services, and hospital care at subsidized rates.

Statistical Data

• Health insurance coverage: Over 95% of Iranians have health insurance coverage,
significantly reducing financial barriers to care.
• Preventive care: Vaccination rates for preventable diseases are high in Iran, exceeding
those of many developed countries.
• Life expectancy: Iran's life expectancy (77 years) is lower than the USA, but it has seen
significant improvements in recent decades, likely due to the universal healthcare system.
The comparison between the USA and Iran highlights the complex interplay between income
inequality and healthcare access and outcomes. While the USA boasts greater wealth and
technological advancements, its high-income inequality leads to disparities in healthcare access
and outcomes. Conversely, Iran demonstrates that a robust universal healthcare system can
mitigate the negative effects of income inequality and improve health outcomes for all citizens.

Conclusion

Overall, macroeconomic indicators serve as vital barometers of a country’s economic health.

They provide valuable insights into its current performance, inform policy decisions, and shape
its future economic trajectory. Macroeconomic indicators are tools, not crystal balls. They offer
valuable information, but their true power lies in the hands of policymakers and analysts who
can interpret them correctly and use them to guide informed decisions for the country’s
economic betterment. This report reveals a complex interplay between GDP, healthcare
systems, and societal factors like inflation and income inequality. While the US, with its high
GDP, struggles with high healthcare costs and limited access due to a private insurance-driven
system, Iran's universal healthcare, despite economic sanctions and resource limitations,
provides greater access and improved outcomes. Notably, both nations face inflationary
pressures, highlighting the need for innovative solutions to ensure healthcare affordability and
resilience. Furthermore, income inequality emerges as a significant factor, with the US
showcasing disparities in access and outcomes compared to Iran's more equitable system.
Ultimately, this report underscores the importance of considering not just economic metrics
but also systemic structures and priorities in building effective and equitable healthcare
systems for all.

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