Re: Question on health care component of the GDP

From: Bill (xxx_at_yy.zz)
Date: 01/26/05 

Date: Wed, 26 Jan 2005 20:21:48 GMT

"Dan Christensen" <dchris@allstream.net> wrote in message
news:xZNJd.2540$df.103150@tor-nn1.netcom.ca...
>
> "Igor" <jjweatherby@houston.rr.com> wrote in message
> news:7AMJd.71721$Z%.28200@fe1.texas.rr.com...
>> Dan Christensen wrote:
>>> Is it true that health care paid for by the individual user or by private
>>> insurance is included in the GDP, while that paid for by the state is not
>>> included? If so, why?
>>>
>>> Dan
>>
>> No. Health care provided by the state is not part of the consumption
>> component of GDP while privately paid health care is. Health care the state
>> pays for is part of GDP but it is part of the Government expenditures
>> component. Government expenditures includes all government payments for
>> goods and services. These are things like Medicare, Medicaid, National
>> Defense, roads, schools, etc. It is still part of GDP it is just not
>> considered consumption.
>>
>
> Thanks, Igor. That seems reasonable.
>
> Can you explain the recent controversy about Cuba including health and
> education services in their GDP? Here is an article on this matter:
>
>
> Tue, Jan. 18, 2005 in The Miami Herald.
>
> Cuba decides to disregard GDP rankings
>
> Foreign experts say the change may suggest that the island's economy
> isn't faring well.
>
> By Marc Frank, Financial Times.
>
>
> After 46 years in power, Fidel Castro, Cuba's president, is known to
> play only by his own rules. Even so, his recent move to disregard the
> standard formula for gross domestic product -- the world's standard
> measurement of an economy's growth -- has confounded both economists
> and ordinary Cubans.
>
> The move to declare GDP, which is called gross socialist product in
> Cuba, a capitalist instrument has been brewing for the past year, after
> José Luis Rodríguez, the economy and planning minister, called GDP a
> tool designed to measure growth in market economies and useless as far
> as Cuba was concerned.
>
> He reiterated the point in his year-end economic report to the national
> assembly. ''Health and education are included if they come with a
> price, but not if they are provided free,'' he said.
>
> According to Rodríguez, Cuba's 2.6 percent annual growth in 2003 was
> actually 3.8 percent when taking into account Cuba's free healthcare
> and education.
>
> This year Rodríguez simply declared that growth was up 5 percent,
> based on the adjusted method.
>
> Economy ministry sources said that with the conventional GDP formula,
> growth was actually 2.8 percent to 3 percent. Experts have found Cuba's
> economy increasingly difficult to decipher. Since 2001, a drop in
> tourism and five hurricanes slowed Cuba's recovery from a 1990s
> post-Soviet economic crisis.
>
> The government acknowledges a worsening foreign exchange shortage, due
> to shrinking credit and investment, a hostile U.S. administration, high
> oil and shipping costs, hurricanes and drought.
>
> Cuba is dependent on fuel and food imports. Its current account has
> operated in the red since the 1991 collapse of the Soviet Union, its
> chief benefactor.
>
> The country, considered one of the world's worst credit risks, is not a
> member of any international lending organization.
>
> The new growth measurement formula could further hurt Cuba's
> credibility and increase suspicion the economy is not doing well.
>
> ''GDP percentages are meant to compare performance, so if you start
> using other formulas, and don't give the calculations, you make the
> comparison impossible,'' a European diplomat said, "which means they
> most likely have something awful to hide.''
>
>
>

This is just a guess, what they may be talking about is price distortions etc.
if there is no charge for imported drugs, Dr. salaries are held low, no charge
for use of equipt. etc.

Bill

Quantcast