Assessing US Policies for Health Care through the Dynamic CGE Approach

The sustainability of the health care expenditure is a topic that at the present time is strongly discussed in the literature. Indeed the “health industry†can be considered as a strategic one within the industries that shape the economy, since it is able to stimulate many other production processes, within the economy, that activate, at their turn, the sectoral income generation. Thus the policy maker has the possibility of implementing a policy, in health care, able to achieve a composite objective: the level of public health care expenditure should be made consistent with the growth path of the economy sought after, both in the aggregate and in its sectoral composition. In this work we concentrate on health expenditure and income generation trying to verify the impact of a change in the inner composition of the health care demands. Our aim is that of determining the impacts of the announced new allocation of health care expenditure in U.S. alongside the multisectoral income circular flow. We develop a dynamic CGE model, calibrated on an USA Social Accounting Matrix that we have purposely built, in which health care reform and its direct and indirect effects on the main macroeconomic variables are determined and quantified.