1.“Distinguish between:” a.“Public goods and club goods.” b.“The Laffer Curve and the Rahn Curve.” c.“Universal Credit and Universal Basic Income.” 2.“A new drug to treat advanced prostate cancer extends expected life by 2 years, giving a quality of life assessed at 0.7 on a standard scale.” a.“How many QALYs does a patient gain?” b.“Would you expect the National Institute for Health and Care Excellence (NICE) to approve the use of such a drug if the treatment cost £50,000? Explain your answer.” 3. a.“At a discount rate of 5%, a benefit of £1000 two years from now has a present value of £907. What would the present value be if the discount rate was 1%?” b.“Why did Lord Stern, in his 2006 review of the economics of climate change, argue for a much lower discount rate for projects intended to mitigate climate change?” SECTION B “Read the passage carefully and answer all questions. Edited from ‘Ailing Health’ The Times 25 October 2021 It has long been a problem of British politics that any attempt to extract value for money from the National Health Service is a heartless attack on the poor and vulnerable. As Britain emerges from a historic crisis of public health and the economy, the government should strive to break this taboo. The pandemic has intensified pressures on NHS funding but spending was already rising steadily in real terms and as a proportion of public spending before the pandemic. At the turn of the century, it amounted to about 27 per cent of day-to-day government public service spending. Taking account of the announced increases, that figure is set to reach 44 per cent. The drivers of this spending have been on both the demand and the supply side: spending on the NHS is now roughly four times the amount spent on defence. Though the NHS costs less than health systems in many other advanced industrial economies, this is a sign that sophisticated treatments are strictly rationed rather than that they are provided cost-effectively. This cannot feasibly go on without crowding out other essential services. The NHS is a provider of services, which are labour-intensive. There is little scope for generating increases in productivity. Yet government planning for health spending assumes there are efficiency gains just waiting to be realised through better organisation. Though there are undoubtedly ways of mobilising existing resources, such as ensuring that GPs are available to provide in-person appointments, curbing costs requires altering the ways healthcare is provided. There are innovative ways of meeting future demand that politicians should be openly talking about. First, a system of universal treatment paid for out of present tax receipts is vulnerable to external shocks such as a novel coronavirus. The NHS ought to have an element instead of pre-funding, under which private insurers collect premiums from people of working age. Second, the state should provide tax subsidies for private health insurance. This is money already being devoted to health spending. Subsidised insurance for private treatment would reduce strains on the NHS. And third, a greater part of health spending could be derived from local rather than national taxation, as is common in Scandinavia. Devolved control of health spending could ease the stress on community-based preventive measures. These are modest proposals that are widely adopted in European health systems. For all the romanticism that attaches to the NHS, no other country has adopted it as a model for healthcare, and with good reason. Charging patients for their treatment is a cost-effective and equitable way of providing care. Presсrіption charges have been part of the NHS for almost 70 years, and dentistry typically involves subsidy rather than being free at the point of use. The burden of rising costs of treating people in the NHS requires a strategy for meeting it. The government should not shy away from a hard-headed message that extra resources must be accompanied by structural reforms.” Questions “Maximum word count is 300 words per answer.” 1.“‘Drivers of this spending have been on both the demand and the supply side’. Explain what these ‘drivers’ are.” 2.“‘There is little scope for generating increases in productivity’ in healthcare. Explain why this is the case.” 3.“‘Charging patients for their treatment is a cost-effective and equitable way of providing care’. How far do you agree with this statement?” SECTION C Maximum word count is 750 words for each answer. 1.“What is meant by a ‘Pigouvian tax’? How useful is this type of tax?” 2.“Define intergenerational earnings elasticity. Should we worry about high values of this elasticity?”
