Question

Governments throughout the OECD spend large amounts of money on publicly funded health services. From a public economics perspective what is the justification for such expenditure?

Answer 1

Government expenditure plays an important role in oversall development of a nation. And the expenditure of the government on health and education is one of the most important components of the government expenditure. The entire well being of a nation depends on the health of the nation. If government spends an adequate amount on health it subsidizes the health care expenditure of the nation and reduces out of pocket expenditure of the residents. This increases income of the consumers and they can spend their income on productive activities and also increase their savings. It is seen that developed nations spend a lagrer share of their GDP on health and education as compared to developing nations.

Thus, considering the imoortance of health care expenditure many nations around the world have increased government expenditure oin health care.