Courts as healthcare policy-makers: the problem, the responses to the problem and problems in the responses

This article starts by analysing healthcare litigation in Brazil by means of a literature review of articles that contribute with empirical findings on this phenomenon. Based on this review, I argue that health care litigation in Brazil makes the public health system less fair and rational. In the second part of this article, I discuss the three most overarching responses to control the level of litigation and its impact on the public health system: (i) the public hearing held by the Supreme Federal Court and the criteria the court established thereafter; (ii) the recommendations by the National Council of Justice aimed at building courts’ institutional capacity; and (iii) the enactment of the Federal Law 12.401/11, which created a new health technology assessment system. I argue that latter is the best response because it keeps the substantive decisions on the allocation of healthcare resources in the institution that is in the best position to make them. Moreover, this legislation will make the decisions about provision of health treatments more explicit, making easier for courts to control the procedure and the reasons for these decisions.

Three applications of the marginal cost of public funds concept

This paper illustrates the use of the marginal cost of public funds concept in three contexts. First, we extend Parry’s (2003) analysis of the efficiency effects excise taxes in the U.K., primarily by incorporating the distortion caused by imperfect competition in the cigarette market and distinguishing between the MCFs for per unit and ad valorem taxes on cigarettes. Our computations show, contrary to the standard result in the literature, that the per unit tax on cigarettes has a slightly lower MCF than the ad valorem tax on cigarettes. Second, we calculate the MCF for a payroll tax in a labour market with involuntary unemployment, using the Shapiro and Stiglitz (1984) efficiency wage model as our framework. Our computations, based on Canadian labour market data, indicate that incorporating the distortion caused by involuntary unemployment raises the MCF by 25 to 50 percent. Third, we derive expressions for the distributionally-weighted MCFs for the exemption level and the marginal tax rate for a “flat tax”, such as the one that has been adopted by the province of Alberta. This allows us to develop a restricted, but tractable, version of the optimal income tax problem. Computations indicate that the optimal marginal tax rate may be quite high, even with relatively modest pro-poor distributional preferences.