Question 1


Price offer curve shows how the competitive market generates an efficient equilibrium in exchange. That means that the quantity of one type of product as an agent offers for each quantity of a different kind of product that they import.

Example 1

In a competitive market the prices are treated as given and each person chooses their utility-maximizing bundle subject to his or her constraint. The recourse constraint dependents on each person's initial endowment of food and medical care. We let the initial endowment for two person's economy (Mats and Sara) be represented by V in figure 1 (see figure 1). We must first identify the offer curves of both people, a collection of points representing the offer of trade of the person's goods at each set of prices. The slope of the budget line represents the rate at which one can trade one good for another at market prices. The steeper the budget line is in figure, the greater the price is of medical care relative to food. For example, budget line AB represents a relatively lower price of medical care relative too food than does budget line CD. To find the competitive equilibrium, we must identify how much each would be willing to trade.

Mats offer curve is the collection of points representing his offer for trade at each possible set of prices. Start at point V. Given budget line AB, Mats stays at point V, the point of tangency between budget line AB and highest indifference curve that is attainable. Given budget line CD, Mats would trade some medicine for some food to go from point V to point N. With budget line EF, Mats would trade to point X. Connecting all such points generates Mats offer curve. The figure also shows Sara´s offer curve, beginning at endowment point V. The two heavily shaded offer curves represent voluntary trades for the two parties. For trade, as in a competitive market, to be mutually voluntary, the offers of the two persons must agree. The offer curves agree only at their point of intersection, labeled point X in the figure. Point X thus constitutes the competitive market equilibrium in exchange for this two-person economy, starting with the endowment of V.

Example 2

Suppose that country A supplies quantities X to the world market for exports and quantities of good Y that it demands from the world market as imports, for all prices. Country B will export quantities of good Y in exchange for various quantities of imports of good X. In equilibrium, country B must import what A exports and vice versa.


How much health will individual "demand" and how much "health input" will individual utilise? Individuals will try to do the best he can for himself, in the sense that he will organize his expenditures on health inputs and consumption so as to give himself the highest possible level of well-being. This means that he will seek to attain the highest indifference curve available to him. In doing this he will be constrained by his limited income, the prices he has to pay for health inputs and consumption activities, and the opportunities open to him for transforming health inputs into health. The budget constraint and the production function act as constraints on his behavior. The financial constraints the individual faces and the latter the technological constraints facing him. The individual's objective will be to attain the highest possible welfare contour, subject to the constraint that he operates on both his budget constraint and his health production function. To examine the individual's behavior therefore one requires a diagram (see figure 2).

The curves C1 and C2 are the indifference curve in cube 1. The bowed-out shaped curve in cube 1 is the individual's welfare possibility frontier. It indicates all combinations of health and consumption which satisfy both the budget constraint and the health production function and is derived from the budget constraint and the health production function. The figure shows how the interaction of prices, income, and health production opportunities gives rise to an "optimal" combination of health and consumption. This can be seen by following the dotted lines in figure. Which of them, however, will he choose? Above it was argued that the individual would be expected to seek to attain the highest indifference curve he can, for this will give him his highest level of welfare. He will therefore operate at point a on the indifference curve IC1. At this point indifference curve IC, is optimal to the WPF. This indifference curve is the highest he can attain while still remaining on the WPF. If he chose to operate on indifference curve ICo, for example, he could still operate on the WPF but his well-being would be lower than that expected at point a. Indifference curve IC2 is clearly not attainable, since operating on it would involve the individual operating outside his WPF. In other words, given the technology of health production, his income, and the prices he faces, he would be spending more on health inputs and consumption than he could afford.

For example, what would happen if individual's income changed? A lower income means that the number of feasible combinations of health and consumption open to the individual is reduced. The old optimal combination-point a-is now no longer available. The best the individual can do for himself with his new income is to operate at point b. Here he has a lower level of health and consumes less. His health is lower because he has less to spend on health inputs and on consumption. The higher the individual's income, the greater will be his demand for health.

For example, what would happen if technical knowledge changed? Differences between individual's levels of education may be associated with differences in the efficiency with which health inputs can be transformed into health. Thus an increase in the state of technical knowledge results in a reduction in the utilization of health inputs but an increase in the demand for health. Better educated are more efficient producers of health and they will demand more health than the poorly educated. They are also likely to receive higher incomes than the poorly educated.


Discounting means that you translate the costs and effects that occur at different times to comparable values at a time using the discounting rate. Considering that the costs and effects that arise in the future are worth less than those that arise today. This is because individuals value money in hand today higher than money in hand tomorrow. This is explained by the increase in consumption per capita over time. Many public projects resulting costs immediately but benefits occur well into the future. For example, in case vaccinations are costs immediate while the benefits occur later. In the case of preventive vaccination, as compared to the costs that occur today with a future benefit. To compare the costs and benefits in a proper way, the future value of vaccinations determined today. Cost and benefit will then be related to the same time by discounting. Authorities in some countries have set discount rates for valuation of public investment at different levels. Discounted rates for government investment projects represent approximately 10 percent in the U.S. and 5 percent in Sweden. We can compare two investments.

Example 1

We want to investigate the societal economic profitability of drug x, which is used as a preventive measure. We have following information:

  • the investment cost is 1000 million kr (year 0)
  • operating costs are estimated at 100 million kr per year (year 0)
  • economic advantage are 500 million kr per year (year 0)
  • we consider a project over 3 years after the year of the investment 0
  • discount rate is 5 percent

Present value of costs is:

Year 0 Year 1 Year 2 Year 3

1000 +100/(1+0,05) +100/(1+0,05)² + 100/(1+0,05)³ =

C = 1000+95+91+86=1272

Present value of economic advantage is:

+500/(1+0,05) +500/(1+0,05)² +500/(1+0,05)³ =

B = 476+454+432=1362

The profitability of this project is thus = B / C = 1362/1272 = 1.07
The advantages are 7 percent higher than the cost per invest crown.

Example 2

In contexts where the costs and effects will start in different years, it is necessary to adjust future costs and effects so that it becomes comparable to the costs and affects that arise in the future. Need for discounting can be illustrated from an example with two competing alternatives, A and B. Both A and B are prevention program and have the same expected effect. It means that we can evaluate the options in a cost analysis. As shown in the table both options means the same total expenditure, 30 million, but there are differences in how costs are distributed over the three years the program is built up. The program A is most of the costs in year 2 and 3, while the costs mainly incurred in year 1 and 2 for program B.

Year Program A Program B

1 5 15

2 10 10

3 15 5

When we discounting with 3 percent rate, the cost for program A will be 26.79 million kronor compared with 27.68 million crowns for program B. Program A, where much of the costs are in year 2 and 3, are therefore preferable.


Deadweight loss occurs when the equilibrium for goods is not optimal. Deadweight loss arises, when the monopoly price set or by taxing.

Example 1

The deadweight loss comes from a misallocation of resources among goods for example, more health care is provided than should be according to consumer preferences. When the monopoly sets the price higher than marginal cost (P>MC), there is a deadweight loss. At the original price (Po) and quantity (Qo) producer were being paid the marginal cost to bring the products to market. Moving from Qo to Q1 leads to an increase in total expenditures from Po to Qo to P1 to Q1 (see figure 3). The deadweight loss to society from the overproduction of health services is the areas between the triangle in the figure.

Example 2

If we assume that an eraser costs 15 crowns in one market, demand will decrease linearly from the maximum demand (1 crown per eraser) to the minimum demand (20 crowns per eraser). In a perfectly competitive market, producers will require 15 crowns for an eraser, and all who can afford it will buy it. But if there is a producer who has a monopoly on the product, will demand a price that gives the greatest profit. If the monopoly price for the eraser is 20 crowns, this would exclude the customer who cannot afford 20 crowns. The economic benefits these customers refrain from because of the monopoly pricing are deadweight loss.


Economies of scale are the extra profits generated by large-scale production, such as mass production. If higher levels of production lead to improved ability to take advantage of specialization providing a better division of labor, it may be possible to reduce average costs. The case of decreasing long-run average costs is referred to as the case of economies of scale. The increase level of output can lead to difficulties in managing and coordination production activities, and then long-run average costs my rise. This is called diseconomies of scale.


It is clear that enough patient volume is needed to cover cost of such high priced treatment. For example, too many patients may lead crowding with long waiting times or, increased labor costs that could again increase costs. Such issues are relevant for determining the optimal size. Figure 4 shows the U-shaped relationship which starts with economies of scale and then yields to diseconomies of scale. The long-run marginal costs (LRMC) curve shows the cost of producing when all inputs can be varied. It will go through the minimum point of the LRAC (see figure 5).

Example 2

If a company makes 500 pencils, it will cost the company 10 crowns each to produce. Another company makes 100,000 pencils and therefore can buy the material needed to make them significantly cheaper than its competitors. So, each pencil will cost the company 5 crowns per pencil to produce it.

Question 2


The principal components of Grossmans model is thatGrossman believes that health, defined as long life and number of healthy days during a given year, pursued and produced by the individual. Health can be treated both as consumptions good and an investment good. As a consumption good health is desired because its make people feel better. As an investment good health also is desired because it increases the number of healthy days available to work and thus to earn income. The consumer does not merely purchase health passively from the market. Instead, consumer produces it, spending time on health-improving efforts in addition to purchasing medical inputs. It is not medical care as such that the consumer wants, but rather health. Medical care demand is a derived demand for an input to produce health. People want health; they demand inputs to produce it. Other important components of Grossman's investment model of health are;

  • Health and consumption of goods gives individuals utility U=U (health, medical care, food etc).
  • The more marginal utility derived from additional consumption of a good or service consumed the better health.
  • Individuals affect their health through the consumption of goods and services.
  • The level of technology helps to transformed health inputs to outputs (health) but technical efficiency level are related to the individual's education level and therefore vary from person to person. Educated people may produce health more efficiently.
  • Both health inputs and consumptions activities costs money and people have limited recourses.

Health is a productive good that produces healthy days (see figure 6). The greater ones stock of health, the greater is the number of healthy days. The horizontal axis measures health stock in a given period. The bowed shape of the curve illustrates the law of diminishing marginal returns (additional resources have decreasing marginal impacts on the output). At health stock minimum (Hmin), production of healthy days drops to zero, indicating death.

In figure 7, we can see that individual achieves utility not only from producing bread but also directly from health itself. Individual values health both as a consumption good and an investment in productive capacity. The former (from E to C, U1) suggest that individuals enjoys feeling healthy (feeling good), the latter (C to D, U2), that feeling healthy makes him more productive, thus allowing him to earn more.

As a result of investment in health leads to good feeling, the utility increase, more future income, more leisure and productivity at work.


1. The rate at which individual's health stock depreciates may increase during some periods of life and decline others. Eventually, as individual's ages, the depreciation rate is likely to increase. The health of older people is likely to deteriorate faster than the health of younger people. The depreciation rate, δ, increases with age from δ0 to δ1 and ultimately to δD. These assumptions imply that the optimal health stock decreases with age (see figure 8). The optimal health at younger age H0, is greater than H1, the optimal stock at older age. Higher depreciation rates increase the cost of holding health capital stock. We adjust to this by holding a greater amount of health in periods when health is less costly. In old age, health depreciation rates are extremely high, δD and optimal health stock falls to Hmin at point B. Elderly would demand more medical care then the young.

2. An increase in education increases the optimal health stock. Education affects the efficiency of health investment and other goods, i.e. highly educated people become more efficient and use less inputs for same level of investment than low educated people. The investment cost for high educated people is lower and the optimal health stock can therefore be higher than with low educated. It makes individual more efficient in producing health. Technical effectiveness means that the effect will be higher from the given inputs. Educated people absorb information more quickly and can affect their health better.

3. What impact does uncertainty have on the optimal level of health investment and health capital? Individual's earnings depend on individual's health. If Kalle were to fall ill next year, his ability to work and his earnings (the return on his next year's health capital) would fall and Kalle is concerned about that risk. An additional dollar of investment on health capital this year will help insure against that loss by increasing his health capital stock, and hence his earnings and consumption next year. This first effect, the improvement of feature earnings, will thus led Kalle to increase his investment in health capital to reduce his risk. However, the figure 8 shows that the marginal efficiency of investment is downward sloping. This second effect means that unless changes occur in productivity, increased health investment has a lower return. Therefore, if the increased investment this year has no impact on Kalle´s ability to earn income next year (Kalle gets headaches but he still can work full days for a full day's pay), then increased risk will affect health investment negatively by lowering the return on the health investment. If the first effect is larger than second, increased risk will lead to more investment in health capital. If the second is larger than the first, Kalle either will choose current consumption rather than health investment or alternatively will invest in a financial asset that, by assumption, is less risky than health investment.


Grossmans model can be implemented in order to investigate a world event like health investment within the family, i.e. how family and household affect demand and investment in health. If the individual's health improved in the family, this can affect the family's total income, where the individual's salary increases, and that each family member's benefits may also increase. The model can also be used to investigate health investment in low income families and if its affects children's health capital in adulthood.


According to me the strength of Grossmans model is;

  • He does not separate the production and consumption because individuals are also producers of health and not just consumers.
  • He sees health as a capital good
  • Grossman presents his theory in three important variables that affect the individual's health behavior; age, education and income.

According to me the weakness of Grossmans model is;

  • The assumption that he is making in his model is too far simplistic of reality. Theory can be viewed from new perspectives, for example, not only focus on individual utility but also focus on the family's or society's utility approach. For example, you could use a utility function that includes the whole family's total consumption of health and other goods. Family perspective is important for demand and investment in health, because each family member not only producing their own health but also the other family members' health.
  • Several variables can be used to see if they have an effect on individuals' health investments, such as: gender, children, employment and so on.

Question 3

1. Unlike the perfect competitor, monopoly market has market power, which is the ability to affect market price. A pure monopoly is an industry with a single seller who has no close substitutes. As such, the monopolist faces the whole market demand curve, which is usually downward sloping (see figure 9). This occurs because the monopolist, unlike the perfect competitor, will not lose all its customer when raising its price. In health sectors, pharmaceutical firms that control patents for certain drugs may be pure monopolists. Equilibrium for the monopolists shows in figure 9. With a downward-sloping demand curve, the incremental or marginal revenue, MR, is less than the demand price. Suppose the monopolist were selling Q0 units at P0. Total revenue, TR0, would be P0Q0. The monopolist would be selling to everyone who is at least willing to pay the price P0. In order to sell one more unit of the good, the monopolist would have to induce more consumers without also lowering to all previous consumers. In this case, because the monopolist must lower the price to everyone else, the marginal revenue will be the price of the extra unit of the good sold minus the loss of revenue from everyone else who now pays less.

To maximize profit, the monopolist produces MC=MR at Q0 in figure 9.The corresponding price is P0 and the total profit is the rectangle P0ACB. If barriers to entry are persistent, the economic profits can be maintained and even increased through advertising, promotion, new product development, or other means. The monopolist's excess profits suggest that the monopolist has reduced the amount produced from the competitive amount. The monopolist in the graph chooses point A on the demand curve. If the monopolist had acted like a competitor by setting a price equal to marginal cost, MC, it would have chosen point E, Providing more output and charging a lower price. The induced scarcity caused by the monopolist necessarily raises the price to the consumer.

2. Elastic means that consumer is willing to pay a certain price for the product and inelastic means that consumer will pay almost any price for the product, for example medicine. In a monopoly market, price elasticity for demand curve, determines if MR is positive (elastic demand) or negative (inelastic demand). This relationship is important for profit maximization production which means MR=MC. The profit maximizing output occurs where MC equals MR, resulting in PM and QM in figure 10. Assuming that economic profits are earned, the price must lie above average cost. Economic profits are shown by the shaded rectangle PMABC in figure 10. Consistent with the hypothesized demand and cost structures, the gap between price and the low marginal cost will be large. A monopoly is only able to maximize profit when the demand curve is elastic. A monopoly cannot maximize profit in the inelastic range of demand because this involves negative marginal revenue. If monopoly producing at the inelastic portion of the demand curve, the monopoly is going to lower the quantity produced and raises the price to achieve more total revenue.

3. A firm may be able to increase profits beyond the level described in figure 10. If a firm can distinguish between markets with different demand characteristics and limit arbitrage (third-party resale at lower prices in higher-prices markets), it can increase profits by charging different prices (price discrimination). We can assume that the firm described in figure 10 sells only in Europe and Latin America. In figure 11, its total demand is separated into the Europe and Latin America demands. With higher incomes and better insurance, the demand is relatively inelastic in Europe. Assume further that the marginal costs of production and distribution remain constant and are equal in both countries, and that prices are not regulated in either market. Profit maximization occur where MR equals MC in each market, resulting in quantities QEU and QLA. Even though marginal revenue will be equal in the Europe and Latin America, the price is higher in the market the less-elastic demand (Europe). Total profit must be greater than those obtained under uniform pricing.

Question 4


The purpose of this study is to conduct an analysis of own-price elasticity estimates and try to understand why reported results differ. Meta-regression approach has been used as a method. The meta-regression considers 150 beers, spirits, and wines, own price elasticity point estimates, which have been drawn from studies that consider demand responses to changes in the price of alcohol in 18 different countries. Over the years consumption of alcohol has created debates and controversies. Government policy has included alcohol specific taxes, restrictions on and prohibition of the sale of alcohol, regulation of product labels, and limits on advertising. Too much alcohol consumption gives society large economic costs. Therefore it is necessary to understand the nature of the demand for alcohol.

According to researches (Edward, 1994) a population's consumption of alcohol will be influenced by price. Estimated elasticity's for beer, wine, and spirits differ widely over time, place, data set, and estimation method, but one conclusion stands out: in almost every case the own-price elasticity's are negative. The Law of Demand says as price increases quantity falls. The own-price elasticity of a good is calculated as the percentage change in quantity divided by the percentage in price. Thus, if the law of demand holds true, the own-price elasticity's must be negative. When using the absolute value form to express elasticity, the critical value is one. If the own-price elasticity is less than one, it implies a relatively small change in quantity for a given change in price and the good is deemed inelastic. If the own-price elasticity is greater than one, it implies a relatively large change in quantity for a given change in price, and the good is referred to as elastic.


The results of the empirical work reported in this paper suggest that the year of the study, the length of study, the per capita level of alcohol consumption, and the relative ethanol share of a beverage are important factors when explaining variations in consumer demand responses to changes in the price of alcohol. Interestingly, the study also suggests that country-specific and beverage-specific effects are not important.


The mid-point of the sample period entered the meta-regression as a quadratic. Since the end of the 1960s, the price of illicit drugs has fallen significantly. At the same time, the quality of the product has increased substantially, and in many countries, prohibition enforcement has been relaxed. Consumption levels of illicit substances have either remained constant or, as in the case of marijuana, increased substantially. If alcohol and recreational drugs are substitutes, these circumstances provide a plausible explanation as to why the demand for alcohol became increasingly inelastic up to 1969 and more elastic thereafter.


Theory suggests that the greater the length of time a consumer has to respond, the more elastic the good becomes. The results of the meta-regression suggest that the longer the sample period, the more inelastic the estimate. The addictive properties of alcohol may explain this result.


There were no a priori expectations as to the sign of this dummy variable, and it could possibly be interpreted as a researcher effect, something common in meta-analysis.


Studies estimating an elasticity value for a single beverage category generate significantly higher elasticity values than studies estimating elasticity's for multiple alcohol categories. As no certainty exists for demand analysis based on the direct specification of the demand equations, this coefficient may, in part, be capturing the effect of using different approaches to demand analysis.


The meta-regression suggests that the greater the consumption level, the more inelastic the demand. Consider a country where the consumption of beer is very high. High per capita beer consumption could be the result of cheap beer, relatively plentiful opportunities to consume beer, or high incomes. The first two of these would potentially indicate a low level of substitutability between beer and other alcoholic beverages. If substitute goods were less attractive, we would expect to find the demand for alcohol to be more inelastic.


The relative variable reflects the relative importance of each beverage. The suggested explanation for why higher relative market shares are associated with more inelastic demand is, however, similar. Consider certain European countries where traditionally the main meal of the day is accompanied by wine. When ordering a meal in such countries, substitute products such as beer and spirits are less available. With reduced relative availability of substitute products we would expect to see more inelastic demand. A similar case can be developed for countries where life centres on local pubs or hotels. In such countries beer is readily available, wine and spirits less so. We would therefore expect to see the lack of substitute products in such countries reflected in more inelastic demand for beer. It is also worth noting that if we suppose a CES utility function, it can be shown that the absolute value of the own-price elasticity of demand of any commodity decreases as the budget share of that commodity increases.


This study began with a summary of available data and ended with a meta-regression analysis. One of the most interesting results of the study was country specific effects. It appears that consumer responses to changes in the price of alcoholic beverages do not vary with country. Further, it appears possible to infer something about the own-price elasticity of a beverage from per capita consumption details. When wine in Anglophone countries continues to rise (Anderson, 2004), we can expect the demand for wine to become increasingly inelastic. As in these same countries, the relative market share for beer is falling; we can expect the demand for beer to become less inelastic. Industry can make use of this information when developing pricing policies. As changes in the elasticity of beer, wine, and spirits imply changes to the optimal tax rates for these commodities, the information is also useful to governments.

As the meta-regression suggests that higher levels of consumption are associated with more inelastic demand, trends in the level of alcohol consumption should also be monitored. Should the level of alcohol consumption fall within a country, we would expect to see, in general, more elastic own-price elasticity estimates for alcoholic beverages. Regardless of changes in consumption, the year coefficients suggest that the demand for alcohol will become increasingly less inelastic as the twenty-first century unfolds.

Question 5


In Sweden there are three levels which have various degrees of responsibility for health care policy. At national level, it is the parliament and government, at regional level, county councils / regions, and at the local level is the municipality. Decisions about resource allocation and funding takes place at different levels.

Swedish people have equal access to health care. According to the Health and Medical Services Act, the Swedish system provides coverage for all residents of Sweden, regardless of nationality. The services available are highly subsidized and some services are provided free of charge. Swedish health care is considered to be accessible and of high quality and expectations regarding health care are very high among Swedes. An important part of the objective of assuring that the entire population receives good health care on equal terms is that the health sector provides care within the limits of its economic resources. There are three basic principles underpinning the decisions and priorities concerning health and medical care in Sweden, as follows: the principle of human dignity, the principle of need and solidarity, the principle of cost-effectiveness. These fundamental principles state that care should be provided on equal terms and according to need, that it should be managed democratically and that it should be financed on the basis of solidarity. An addition to the Health and Medical Services Act regarding priorities in health care was made in 1997, to regulate how patients should be prioritized depending on the type of medical problem. Those patients who have the greatest need of care should have priority over other patients. National guidelines stating who is regarded as having greater need than others are included in the law.

With respect to elective treatment, long waiting lists are a problem. In 1992, a 3-month guarantee was issued for 12 selected treatments. The treatment guarantee meant that if a county council could not provide treatment within 3 months, the patient was to be offered treatment at a hospital in another county or at a private facility. These waiting lists may be one of the reasons behind the growing market for voluntary health insurance in Sweden.

Sweden has a long tradition of local self-government. The responsibility for health care is decentralized to regional and local governments, with the exception of overall goals and policies, which are determined at national level.

The funding of the Swedish health care system is primarily through taxes. Both the county councils and the municipalities have the right to levy proportional income taxes on their respective populations. The financing of health care services by local taxes is supplemented by the Government and by user charges. The financial and political responsibility for health care is decentralized to the county councils. In 2003, the total cost for the county councils was SKr 149 billion, of which approximately 92% was directly connected with health and dental care. The corresponding figures for the municipalities in the same year were SKr 389 billion.

The social insurance system, managed by the Swedish Social Insurance Agency, provides financial security in case of sickness and disability. Insurance is mandatory and covers part of an individual's income losses due to illness and use of health care services. The insurance also covers individuals' expenditures for health care and prescribed drugs according to high-cost protection schemes. The majority of national health insurance is financed by employers' contributions; the rest is financed by specific transfer payments from the central government. Both private and public employers pay a contribution per employee to the health insurance system.

There are direct, small fees for medical attention payable by patients; these fees are in the form of flat-rate payments. In 2003, the county councils received SKr 5130 million in patients' fees and other fees, which accounted for 2.8% of the county councils' total revenues. In almost all county councils, children and young people (under 20 years of age) are exempted from patient fees. Only a few county councils have small user fees for people under the age of 20. For inpatient care, normally a fee of SKr 80 per day is charged, but reductions are possible for pensioners and those in low-income groups.

Private medical insurance is very limited in Sweden. In 2003, about 200000 inhabitants (2.3% of the population) had supplementary insurance. About 62% of those with private medical insurance had an individual insurance policy. However, the market for voluntary health insurance is growing. One of the reasons behind the growing market for voluntary health insurance is the long waiting lists for elective treatment under the county councils. The main benefit of having supplementary insurance is that it allows quick access to a specialist in ambulatory care when necessary. Another benefit might be the possibility of jumping waiting lists for elective treatment. However, voluntary health insurance is a small sector in Sweden in comparison with other EU countries.

Health expenditure from public sources as a percentage of total health expenditure Sweden's share in 2002 was 85%. At the start of the 1990s, Sweden's total health care expenditure as a proportion of GDP was above the EU average. Health care expenditure as a share of GDP was 9.2% in Sweden in 2002, which was lower than in Iceland (9.9%), but higher than in Denmark (8.8%) and Finland (7.3%). Sweden's health care expenditure (US$ purchasing power parity) per capita was 2517 in 2002, which was slightly higher than the EU average (2131 ), lower than in Denmark (2580), but higher than in Finland (1943).


The objective of the Australian health care system is the right justice, efficiency and quality. This means that access to health care should be equitable, that the service should be able to afford a high standard and should be of good quality. The Australian government funds a large part of the health care sector. The health care system is publicly financed by general taxation and the health insurance system is called Medicare Australia. One third of the state budget is used for health care and at least half of that finances the public hospitals. The government and the states and territories fund about two thirds of the health care system, the remainder is privately funded.

There are different ways to claim the Medicare benefits. Either the residents pay for the doctor upon visit and get the benefit later on or they can claim the payment for the visit in advance. There is also a possibility for the health care providers not to charge the patient but instead handle the administration themselves and get the benefit directly from Medicare.

Medicare is financed by another income based tax. The Medicare health tax adds up to approximately 8,5% of the total health care expenditure. Treatment in public hospitals is free of charge and there is no limit to the amount of health care services used by the individual. This means there is no co-payment system for health care services unlike in Sweden.

All residents in Australia have the right to the benefits system given that they possess a Medicare card. In addition to this some people are eligible to a concessional benefit through a concession card. The safety net threshold system is based on an initial co-payment by the costumer and the rest is paid by the Australian government. The maximum sum paid by the costumer is $33,30 (about SEK220) or $5,40 (SEK35) (for concession card holders) per pharmaceutical. If a costumer reaches a total of $1281,30 (SEK8300) within one calendar year, the remainder paid that year is according to the rate of concession card holders ($5,40). For those eligible for a concessional benefit the limit is $324,00 (SEK2100) per calendar year. The rest of their expenditures are free of charge. This is called the safety net threshold. In Sweden the safety net threshold has four levels and the maximum amount paid is SEK1800 per year independent of the cost per item prescribed.

If a drug is sold under two or more brands, the subsidization by the government reaches a maximum amount set by lowest priced item. If the customer uses a more expensive drug they will pay the price difference on their own. This is not included in the safety net threshold. In difference to Sweden where the pharmacies are obliged to substitute to a less expensive brand, this is only done at the customer's request in Australia.


France has a system of universal health care largely financed by government through a system of national health insurance by elements of tax based financing and complementary voluntary health insurance. So the French health care service is financed by both public and private insurance. The national health insurance is further financed thru employers, employees and a ‘general social contribution' which is based on the total income. In 2000 did these three contributors account for almost 90 % of the total revenue.

Lately have the Parliament's and the government's growing role of deciding the health care policies and financing collided with the national health insurance in that sense that the NHI's role has diminish at the expense of the state. In order to establish parliamentary control over health care and its resources and attempting to clarify the respective roles of the state and the NHI funds has the health system gradually become more decentralized from national to regional level.

All citizens are enrolled with an insurance based on their occupational status; in addition 90 % have complementary insurance to cover up what is not covered by the national health insurance. The statutory health insurance system is divided in three main: The general system covers about 84 % of the population (employees in commerce and industry and their families), The agricultural sector schemes cover farmers and their families (7 % of the population,). The system of self-employed people covers 5 % of the population. It was not until year 2000 that the last uninsured was covered on basis of French residence.

Total expenditure on health care in France was estimated at 9.7 % of GDP per capita in 2002 and the total number had risen to11.1 % of GDP per capita in 2006. Public expenditure constituted 77 % of total health expenditure in 2004. France is one of the highest ranked countries in Europe when it comes to amount spend on health as a proportion of GDP

In year 2000 was the health care in France ranked as the best provide throughout the world. The French system could be understood as a combination of the British nationalized program and the competitive insurance based US system. The health providers are a mixture of private ambulatory services and public hospitals. Also the financing of health care is a private-public mixture which leaves the French citizens to an optimal freedom of choice. The health system has a liberal as well as a pluralistic characteristic. Liberal in that sense that public and private service can exist and complement each other, one example of this coexistence is that private physicians can take a part time position at a public hospital in order to get the state own services' privileges. The pluralism is shown by the many different services provided to the citizens including; rural home-visiting doctors and private high-tech hospitals in Paris

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