Question 3 Equity of access is a primary goal of many health systems. Determinin

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Question 3 Equity of access is a primary goal of many health systems. Determining whether Australia's system (Medicare) meets this goal is an important research question. Consider the case of access to general practitioners (GPs). The probit results presented below in Table 3 are part of an analysis aimed at answering whether there is equitable access to GP services where access is defined on the basis of health needs rather than ability to pay The data consists of a sample of 2528 single individuals who were surveyed throughout Australia in 1995 as part of the National Health Survey conducted by the Australian Bureau of Statistics. The "dependent variable" for the study was VISIT, an indicator variable that was equal to one if the individual had visited a GP in the last two weeks and zero otherwise. Table 2 provides definitions of all variables together with their means Only the results in columns (1) and (2) are relevant for this question. Why is inclusion of a table like Table 2 a useful part of reporting applied econometric work? The intercept represents the value of the index (or structural part of the probit regression) for a particular choice of reference or base individual. What is the reference individual for this model and hence interpret the estimate for the intercept in column (1)? Estimate and discuss the impact of each of the explanatory variables in terms of changes in the probability of visiting a GP relative to the reference individual If there is equity of access then variables related to income should not affect visits to GPs. Using the results in columns (1) and (2) evaluate the null hypothesis of equity of access? (i) (1) (iii) (iv) Table 2: Variables included in regression models of GP visits Variable Definition Visit Age Income Male Phlth Sample mean 0.19 1 if visited GP in last 2 weeks, 0 otherwise Age in years Income in $000's 1 if Male, 0 otherwise 1 if not in excellent or very good health, 0 otherwise 34.7 23.13 0.50 0.37

Explanation / Answer

The classical economists, due to their faith in Say's law and wage-price flexibility, believed in full employment and any ups and downs in the level of economic activity were attributed solely to external shocks (wars and natural disasters). According to them, any unemployment that happened during the time these shocks took time to adjust was purely "voluntary", since the people preffered to remain unemployed than work at the existing wage rate. Therefore, they believed that the economy should be left to its own internal mechanism to maintain full employment. There should be no government intervention and free trade should prevail.

Keynesians on the other hand suggested government intervention via expansionary fiscal policies to overcome recession. Expansionary fiscal policies would trigger the multiplier effect many-folds during the recession and impact the economy positively. He also favoured counter-cyclical demand management i.e. counter-inflationary policies to overcome the heat of recessions.

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