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As governments attempt to get their finances back into balance, many have cut back on a wide range of spending commitments. Some governments such as the UK have chosen to protect spending on healthcare, though that spend is no longer rising at its previous rate leading some campaigners to accuse the government of imposing "cuts" (see this BBC news story).

Some thinkers argue the NHS should not be protected. They are opposed by many campaigners who argue the NHS should get even more money (e.g. the National Health Action Party).

One argument used by those who propose increases in health spending is that health spending is good for the economy. A recent analysis by some health economists sympathetic to this view appeared recently in BiomedCentral. They summarise the debate well:

The Great Recession that beset Europe and North America since 2007 has sparked widespread debate about alternative approaches to achieving economic recovery. Much of the discussion has centred on the ques- tion of whether government spending will promote or inhibit economic growth. Critics of government spending argue, first, that such spending has an immediate effect of increasing debt which, if associated with a loss of confidence by investors, will also increase the cost of servicing that debt as a consequence of increased inter- est rates. Second, they argue that, by “crowding out” private markets and, by implication, their assumed greater efficiency, they will inhibit the growth necessary for recovery. In contrast, advocates of greater spending during recessionary periods, which are characterized by unemployment and deficits, argue that the effects of short term increases in borrowing will be compensated for by higher growth resulting from a high marginal propensity to consume, generating positive cycles of consumption and employment growth. Many of these arguments have been tested empirically.

They proceed to make an econometric argument that spending more on health would boost the economy arguing:

Our findings indicate that government spending on health may have short-term effects that make recovery more likely.

I'm slightly suspicious of their conclusion as BiomedCentral isn't exactly a mainstream Economics journal and the authors have known bias on the topic.

So is their conclusion that health spending will boost an economy economically sound?

  • The article cited makes specific claims about different types of government spending. Given that I don't think a general answer would be enough. – matt_black Jan 14 '14 at 6:44
  • Hmm, okay. I've been having trouble finding multipliers for healthcare spending. It's annoying, either the numbers are too general (e.g. government spending as a whole) or too specific (e.g. medicaid spending). – Avi Jan 14 '14 at 6:59
  • This is a subject that economists disgree about. So it's not really on topic here. Try the politics site, if you have a strong stomach. – DJClayworth Jan 15 '14 at 3:13
  • @DJClayworth If I had requested a discussion on what government policy should be it would be clearly off topic. What I actually asked for is an analysis of statistical evidence for a particular claim. That people disagree about the answer doesn't make it off topic (most of the questions here would be ruled out if that were a valid criterion). – matt_black Jan 15 '14 at 9:05
  • @matt doesn't seem very notable, though. – Sklivvz Jan 18 '14 at 0:58

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