Fiscal Policy to Promote Health
The fiscal policies discussed in this chapter in relation to health and health care goods can be applied to other goods and markets, such as housing and education, some of which may have important effects on health. This chapter does not provide an exhaustive discussion of the goods that indirectly promote health, but it does briefly consider some of these policies in relation to workplaces, employment leave policies, and day care. Note that policies focused on formal labor markets will not be effective in reaching large segments of the population in many countries. Policies that provide health-related services, such as day care, that are not based on formal labor market participation may have a broader effect.
Workplace Health
Governments can use tax relief and financial support to producers to encourage firm-specific actions to promote health. Many countries mandate safeguards in the workplace and levy penalties against occupational health violations. Most government actions are mandates rather than fiscal policies, but a combination of approaches may also be used.
A growing area for workplace health promotion is HIV/AIDS. Bloom and others (2004) suggest that the failure on the part of most firms to act—even if they correctly perceive the business, human, and social challenges HIV/AIDS poses—is attributable to a lack of incentives. Significant externalities (benefits to society and firms) are likely to result from promoting greater action by firms. Some private firms have begun providing HIV/AIDS prevention and treatment services to employees, families, and their communities ("Face Value: AIDS and Business" 2004). Sometimes government support is involved, but little information is available to evaluate the potential of fiscal policy.
Maternity Leave, Sick Leave, and Family Care Leave
Government policy can alter choices regarding different types of worker leave. Many countries have financial or legislative support for caregiving, although most focus on children. Rhum (1998) cites evidence that more than 100 countries—and almost all the industrial countries—have some legislation about parental leave, although in several countries it is unpaid.
Caregiving policies that allow people to take time off work to care for aged and chronically ill family members are less common than policies for child care, particularly in developing countries, but tax benefits and allowances for these types of caregiving are becoming increasingly available in the industrial countries (Brodsky, Habib, and Mizrahi 2000; Pijl 2003; Wiener 2003). Although the provision of services in kind by the government is still an important mechanism, the trend is toward empowering consumers by offering subsidies or tax deductions that allow them to choose among caregiving options. Countries tend to use a combined approach to financing that relies on payroll taxes imposed on employees and employers, general taxation, and copayments. Important issues that developing countries need to address in this respect include targeting compared with universal provision, the mechanisms to pay for or to insure care, and the extent to which long-term care should be integrated into the health care and social service systems (Brodsky, Habib, and Mizrahi 2000; WHO 2003).
Day Care and Early Childhood Education
Some countries use targeted fiscal policies, such as income tax deductions or direct provision, to increase the use and quality of early childhood education and child care services. Important health, labor market efficiency, growth, and equity arguments support subsidizing these services, particularly for low-income families, because without subsidies women may be forced to limit their work or to leave the labor market, and families may have to use low-quality care or leave children unattended. Van der Gaag and Tan (1997) argue for public subsidies based on cost-benefit analysis of early childhood development programs. They conclude that the greatest payoff comes from targeting the most deprived families and that the private benefits are sufficient to expect better-off parents to pay.
Two large-scale, home-based day care programs targeted to poor families are Community Well-Being Homes (Hogares Comunitarios de Bienestar) run by the Colombian Institute for Family Well-Being (Instituto Colombiano de Bienestar Familiar) in Colombia (Myers 1995) and the Integrated Child Development Program in Bolivia. The former is an interesting case of a targeted cross-subsidy because the financing comes from the wealthier formal sector by means of a payroll tax, whereas the services are targeted to the poorest families. The program was 85 percent subsidized in the early 1990s. Parents paid a proportion of the caregivers' wages on a sliding-scale user fee (Young 1996). The Bolivian program includes nutrition, health, and cognitive development interventions and is one of the few early childhood programs in developing countries that has been formally evaluated (Behrman, Cheng, and Todd 2000). The evaluation shows that the program significantly increases cognitive achievement, although the results depend on age and the duration of exposure to the program.
