Download The Economics of Health Care

The Economics of Health Care
ECM206
Nancy Devlin
[email protected]
Course organisation
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Week-by-week guide to this module
Key readings
Further readings
Study questions
Assessment
Lectures
Questions?
Topic 1. Introduction to the economics of
health and health care.
1. The starting point for economic analysis:
 Resources are limited
 Potential uses of those resources are
virtually unlimited.
Thus:
 Health care is an economic good: i.e.,
scarce relative to our wants for it.
 Choices about the way health care is
funded, produced and distributed (the
‘basic economic question’)
Q. Some would argue that health care is a
basic human right and to treat it as an
‘economic good’, like any other sort of
consumer good or service, is irrelevant or
inappropriate. What are your views?
Q. No health system can afford to treat all of
the health needs of its population that could be
treated using available technology. Rationing
is unavoidable. True or false?
Basic economic questions.
1. What combination of health care/nonhealthcare goods should be produced in
the economy?
2. Which particular types of healthcare
should be produced?
3. What resources (inputs) should be used
to produce these healthcare services?
4. Who should receive the medical goods?
1 & 2 concern allocative efficiency
3 concerns technical efficiency
Each decision involves tradeoffs.
2. Production possibilities curve
Mental
health
D
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Opportunity cost
Law of increasing opportunity cost
Technical efficiency
Allocative efficiency
Elective
surgery
3. Brief introduction to competitive
markets
 Demand
 Supply
 Price and equilibrium
Price
£
Quantity per time
period
Underlying assumptions:
 Consumers have perfect information on
prices, quality, benefits of healthcare
(“consumer search”)
 Consumers can judge quality
(“caveat emptor”)
 Consumers are rational and are the best
judges of their own well-being
 Consumers receive the benefits of any
health care consumed.
 “Firms” behave competitively and respond
to profit incentives
4. Is health care “different”?
(from what…?)
Consumer behaviour in health care markets
Provider behaviour in health care markets
The role of Governments
 regulation
 subsidisation
 provision
5. Is health care different? The supply and
demand for organs and blood.
6. Economic models
7. Positive and normative economics
Positive = value free.
Normative = involves judgements