Due to its recent economic woes, Spain has imposed a number of austerity measures including significant cuts to social services and health care. The Economist reports that “expenditure was reduced by 13.7% in 2012 and by 16.2% in 2013 (including social services). Some regions imposed additional cuts as high as 10%.”
Cuts to health care spending occurred along two dimensions: excluding more people from the public health system, and increasing cost sharing for those who have access. On the first dimension, government decided in 2012 that it will not provide any of the estimated 873,000 non-registered immigrants with non-emergency health care. Secondly, individuals with severe diseases, such as Hepatitis C and some cancers, are now required “…to pay for part of the medication. This has led to more people not taking the medicines they need but feel they cannot afford.”
More cost sharing is a good thing when it reduces unnecessary utilization. However, increased cost sharing and decreased access to care can also decrease public health. After Greece enacted austerity measures, the country experienced “dramatic increases in HIV, mental illness, TB and the return of malaria…The price tag of controlling a TB outbreak in New York City in the 1990s, a whopping $1.2 billion, proved the value of prevention, which would have cost an estimated one-tenth of that, and saved much misery in the process.”
Due to the high externalities, covering health care cost for deadly contagious diseases not only improves health, but also can be net cost saving. For other non-contagious diseases—such as cancer treatments—your preferences for the correct amount of redistribution between wealthy individuals and sick individuals will determine whether you believe the increased cost-sharing for non-contagious diseases is good policy.