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Macroeconomic Effects of Healthcare Financing in Colombia

Author

Listed:
  • Oscar Iván Avila-Montealegre
  • Juan J. Ospina-Tejeiro
  • Mario A. Ramos-Veloza

Abstract

Healthcare expenditure in Colombia is expected to increase by 35% over the next eight years, due to population aging, rising costs, and domestic policies. These trends, in a context of high levels of informality and affiliation to the subsidized regime, add significant pressure to public finances. Using a dynamic general equilibrium model with heterogeneous households, we analyze the macroeconomic impact of financing a higher public healthcare expenditure through different taxes. The funding sources play a significant role in shaping the aggregate dynamics and income inequality. While consumption taxes are the best option in terms of output, financing with taxes on high-skilled labor improves income distribution. **** RESUMEN: En Colombia, el gasto publicó en salud incrementaría alrededor de 35% en los próximos ocho años debido al envejecimiento de la población, al aumento de los costos de tratamientos y medicinas, y a las políticas propias del sector. Estas tendencias, en un contexto de alta informalidad y dependencia del régimen subsidiado al presupuesto del Gobierno, ejercen una presión significativa s obre l as finanzas públicas. Utilizando un modelo de equilibrio general dinámico con hogares heterogéneos, analizamos el impacto macroeconómico de la financiación de un mayor gasto en s alud a través d e impuestos al consumo, al uso del capital y al trabajo. Encontramos que las fuentes de financiamiento tienen un papel significativo en la determinación de la dinámica agregada y la desigualdad del ingreso. Mientras que los impuestos al consumo son la mejor opción en términos de producto, la financiación mediante impuestos al trabajo de alta calificación mejora l a distribución del ingreso.

Suggested Citation

  • Oscar Iván Avila-Montealegre & Juan J. Ospina-Tejeiro & Mario A. Ramos-Veloza, 2024. "Macroeconomic Effects of Healthcare Financing in Colombia," Borradores de Economia 1278, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1278
    DOI: 10.32468/be.1278
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    References listed on IDEAS

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    More about this item

    Keywords

    General Equilibrium; Heterogeneous Agents; Taxes; Government Expenditure; Equilibrio General; agentes heterogéneos; impuestos; gasto del gobierno;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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