week 8 lec notes
DepartmentInternational Development Studies
ProfessorAnne- Emanuelle Birn
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Nov 2 (week 8, lecture 8)
Why health economics? (p37)
-spending is soaring across the world.
-need to maximize value for spending (efficiency): better outcomes at same or lower cost
-health economics is driving health care policy and health system planning.
-remember that factors that lie outside health care services and systems, including income, education, housing,
water and sanitation, social security systems, nutrition and transport are as important, if not far more important
than medical care.
-low cost interventions for developing countries (orthodox, neoclassical approach) V.s
comprehensive, primary care-oriented redistributive systems (heterodox social justice approach)
-ideally health economics assesses fairness and equity in context of local culture, history and politics.
Expenditures= price x quantity
Provide losses= revenues t expenditures
-price links supply with demand
-if supply is fixed and demand is high: price should go up
-if price free demand should go down
Why the difference (542-3)
-physicians often spending third party $
-some health spending has no medical benefit (unnecessary services, profits, corruption, malpractice premiums etc.)
-health is special (beyond $): may be better not to need health care: vulnerability.
-health care spending shaped by values (through politics & policies)Uv}ÇZ]}vo[}vµu.
-most societies deem health care to be a human right: everyone deserves healthcare and it should not be in the
marketplace depending on what the person is able to buy or spend.
Means of financing health care
-revenues gathered by national or local governments through taxes
-tax-based or salary-deducted contributions to public insurance systems
-private payment to private insurance schemes or out of pocket expenditures at the point of healthcare provision.
Ultimately households pay, but fairness differs:
-general taxation is most progressive (fair)
-mandatory health insurance less fair, especially if one premium for all.
-private insurance even less fair: sickest (poorest) pay higher premiums
-out-of pocket least fair (most regressive) t no risk sharing at all. You pay what you use, so the sickest and the
neediest end up paying the most.
-inadequate health financing is an important cause of poverty and insecurity
Health insurance model (546-7)
-guilds and workers- mutual protection/friendly society Æ social insurance (national and community based)
-risk pooling (to reduce costs of expected illness, burial, etc.). Can be extremely beneficial.
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