HEALTH ECONOMICS

WHAT IS HEALTH?

. According to World
Health Organization's
(WHO) constitution
“Health" in health
health is 'a state of
economic (evaluation) is
complete physical,
health status according
mental and social well
to some measure.
being and not merely
the absence of disease
or infirmity'
Health economics is the study of distribution of
health care. It is a branch of economics concerned
with issues related to efficiency, effectiveness, value
and behavior in the production and consumption of
health and health care.
It is the allocation of resources within the health
system in the economy, as well as functioning of
health care market.
Health economics is concerned with the formal
analysis of costs, benefits, management, and
consequences of health and health care. It is the
branch of economics concerned with the application
of economic theory to phenomena and problems
associated with health and health care.
Health economics is the study of how scarce
resources are allocated among alternative uses for the
care of sickness and the promotion, maintenance and
improvement of health, including the study of how
health care and health-related services, their costs
and benefits, and health itself are distributed among
individuals and groups in society. It can, broadly, be
defined as 'the application of the theories, concepts
and techniques of economics to the health sector'.
 CONCEPTS IN HEALTH
ECONOMICS

 Resources
 Scarcity opportunity of cost
efficiency
production of health
 health care market
 CONCEPTS IN HEALTH
ECONOMICS

level of
national
income
economy general
level of price
outputs level

Macro-
economics
 CONCEPTS IN HEALTH ECONOMICS

Microeconomics
•Microeconomics is the study of economic
behavior of individual decision making units
such as: consumers, resource owners and
business firms in a free enterprise economy.

•This can be measured by conducting market

surveys, pilot and feasibility studies.
 CONCEPTS IN HEALTH
ECONOMICS
• Health Microeconomics
• Health microeconomics is concerned with how individuals
choose, minimize costs or maximize profit or utilities within a
given health care system within a set of rules and prices.
Meaning and scope of health economics

Determinants of health

Demand for health and health care

Supply of health care

Health care markets

The relationship between economic growth
and health

Health sector budgeting and planning

National health systems

Equity in health outcomes and in health care

International health.
 Medical
advances

Due to
public increase in
awareness life
expectancy

NEED FOR
HEALTH
Higher ECONOMICS Changes in
expectation family
among structure and
people norms

Advances in
health
research
 IMPORTANCE OF HEALTH ECONOMICS

• To formulate health services

• To establish the true costs of delivering health

care or to estimate all real costs like the use of
patients' time, loss of output elsewhere in the
system etc
 IMPORTANCE OF HEALTH ECONOMICS

• To evaluate the relative costs and benefits of

particular policy options
• To estimate the effects of certain economic
variables like user charges, time and distance
costs of accessibility, etc on the utilization of
health services