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AHEAD Working Papers Series

N° 01/2017

Awawda, S. & Abu-Zaineh, M. (2017). Assessing the Potential Welfare and Macroeconomic Effects of Universal Health Coverage: A Dynamic Microsimulation-based CGE Approach Applied to Palestine

Summary

The implementation of “Universal Health Coverage” (UHC) poses serious challenges. Some of these stem from the macro-fiscal space considerations while others relate to the micro-behavioral sphere. This paper seeks to assess the macro-fiscal conduciveness of UHC-oriented reforms in Palestine using a dynamic microsimulation-based computable general equilibrium (CGE) approach. Overall, UHC-oriented reform appears to enhance social welfare and economic growth. However, a parallel expansion in the breadth and width of coverage can have a sizeable budgetary impact, with fiscal deficit representing 14% of the GDP. The UHC spending would absorb about 10% of GDP, 15% of public spending and 57.4% of public spending on health. Under conditions of narrow fiscal space, an additional annual growth of 3.0% is required to progress along all the dimensions of UHC. A set of policy measures, which can help achieve UHC in a financially sustainable manner is advanced.