Allocating Vote: Health — ‘Needs Assessment’ and an Economics-Based Approach

Abstract

This paper critiques 'needs assessment' as a basis for allocating public funding of health and disability services and discusses an alternative economics-based approach. In essence, the former approach ignores the effects on health outcomes of health care spending at the margin while the latter focuses explicitly on these considerations. A simple diagrammatic model is introduced that illustrates at a conceptual level the (micro) economic constraints and choices available to policy-makers. Finally, some practical steps and unresolved issues in implementing the economics approach are considered.