IDSB04 Lecture 3 Chp. 3 October 26/2010
Health Economics
Trillions are spent on health worldwide
But, only 1/8 of this money is spent in the developing world
o80% spent in the private sector
Not only about minimizing cost
Obtaining greatest value from efficient use of resources
oBetter outcome for same cost
oSame outcome at a lower cost
oBetter outcome at lower cost
Application of theories, concepts, and techniques of economics to institutions, actors,
activities affecting health.
Quantity and allocation of resources
Organization, funding, and behaviour of health services institutions and providers.
Efficiency of resource use
Effects of health interventions
Most health economists see health as medical treatment and individual preventative
measures, but..
What’s the difference between investing in health and investing in health care?
Orthodox health economics:
oTargeted low-cost interventions for developing countries
oAllocation decisions based on resources and interventions with greatest impact at
lowest cost, given scarce health resources
Social justice health economics:
oComprehensive means integrating primary health care-oriented universal systems
with broad redistribution of wealth and income
Regardless, health economic informed by value judgment
Market Basics
Prices dependent on supply and demand
Rational choice by individual given this dynamic determine consumption patterns
Key assumptions
oAll participate voluntarily and can leave market
oAll equally informed regarding price, demand, availability
oTrue need takes back seat to supply and demand
Health Care Markets
Classic supply and demand dynamics do not apply
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