Health Economics

Topics: Health economics, Economics, Health care Pages: 5 (1420 words) Published: November 16, 2013

Health Economics

Nowadays, economics have taken their high places in the countries, and they are necessary in the business field because they analyze the production, distribution, and consumption of goods and services. One of these economics is the health economics. Health delivery. The application of health economics reflects a universal desire to obtain maximum value for money by ensuring not just the clinical effectiveness, but also the cost-effectiveness of healthcare provision. Human usually maintain his life and accepts all the methods required to preserve it by following the different preventive ways at the level of individual and collective. Obviously, the disease impairs the human’s energy, in addition to the expenditures incurred by him and the amount of production lost because of the absence from work. From the material terms, the medical expense is a part of the human’s individual expense because the person will need to buy the required medicine note that the cost of treating the disease increases as a result of scientific discoveries and the resulting complex devices to diagnose and treat the disease. But from the production terms, it’s known that the psychological situation of the patient affects his work and decreases the amount of the production. Also, being absent from work because of the disease prevents the person from doing his job so, people will not benefit from his mental, physical and different potentials. Consequently, if we considered that the human element is the effective moving element to make the economic development and social plans, his absence will be an obstacle and will delay the required things from him therefore, the raising level of population’s health is an essential goal that must be reached, either for securing the person’s joy, or to raise the work’s production.

Health care demand
Health care is demanded as a means for consumers to achieve a larger stock of "health capital." The need for health is not like most other goods because the person assigns resources in order to consume and produce health. The description gives three roles of persons in health economics. The World Health Report (p. 52) states that “people take four roles in the health care: contributors, citizens, providers and consumers.” Beyond problems of the essential, "real" demand for medical care derived from the desire to have good health (and thus influenced by the production function for health) is the important differentiation between the "marginal benefit" of medical care (which is always related with this "real demand" curve based on derived demand), and a separate "effective demand" curve, which summarizes the amount of medical care demanded at particular market prices . Market equilibrium

The five health markets typically analyzed are Health care financing market, Physician and nurses services market, Institutional services market, Input factors market and Professional education market. Although assumptions of textbook models of economic markets apply reasonably well to health care markets, there are important deviations. Many states have created risk pools in which relatively healthy enrollees subsidise the care of the rest. Insurers must cope with adverse selection which occurs when they are unable to fully predict the medical expenses of enrollees; adverse selection can destroy the risk pool. Features of insurance market risk pools, such as group purchases, preferential selection, and preexisting condition exclusions are meant to cope with adverse selection. Insured patients are naturally less concerned about health care costs than they would if they paid the full price of care. The resulting moral hazard drives up costs, as shown by the famous RAND Health Insurance Experiment. Insurers use several techniques to limit the costs of moral hazard, including imposing copayments on patients and limiting physician incentives to provide costly care. Insurers often compete by their choice...

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