Health economics is concerned with efficiency, effectiveness, value and behavior in health and healthcare. It studies the use and allocation of resources in health services, and the costs and benefits of health policies and programs. Factors influencing health economics in India include population size, disease burden, government policies, and the pharmaceutical industry. Health insurance plays a key role by pooling financial risk, improving access to care, and influencing utilization of services.

1. BASICS OF HEALTH
ECONOMICS
SUBMITTED TO: DR. PANKAJ RATHOUR
SUBMITTED BY: JASPREET KAUR
J(3RD SEM)

2. HEALTH
According to WHO, “Health is a state of complete physical, mental and social well being
and not merely the absence of disease and infirmity
Economics
Economics is the study of science that deals with the consequences of resources scarcity.

3. DEFINITION OF HEALTH ECONOMICS
• Health economics is a branch of economics concerned with issues related to efficiency,
effectiveness, value and behavior in the population and consumption of health and health
care.
- lee and Mills
• In simple words, study of all the financial aspects of health care system.

4. HEALTH ECONOMICS
It concerns
1. Quantification of the resources used in health service delivery over a period of time.
2. Efficiency with which resources are allocated and used for health purposes.
3. Effect of various health services upon health and well-being of the population.

5. IMPORTANCE
• To formulate health services
• To establish the true costs of delivering health care
• To evaluate the relative costs and benefits of particular policy options
• To estimate the effects of certain economic variables on the utilization of health services.

6. NEED FOR
HEALTH
ECONOMICS
Due to
increase
in life
expectanc
y
Changes
in family
structures
& norms
Advances
in health
research
Medical
advances
Public
awareness
Higher
expectatio
n among
people

7. FEATURES OF HEALTH ECONOMICS
• Health and medical care is considered as economic goods
• Health is a private or a public good
• Measurement of health is also considered in economics
• Investment aspects of health
• Resources costs of different diseases, effects of health and medical care provision
• Planning of health and medical care

8. HOW HEALTHCARE ECONOMY WORKS
The healthcare economy is a complex and multifaceted system, and it varies from country to
country due to differences in healthcare systems, policies, and economic conditions. Here's a
general overview of how the healthcare economy works:
1. Providers and Services: Healthcare providers include hospitals, clinics, physicians,
nurses, pharmacists, and various other professionals and facilities. They offer a wide
range of services, from primary care to specialized treatments and surgeries.
2. Health Insurance: Many individuals and employers purchase health insurance to cover
the cost of healthcare services. Health insurance companies collect premiums from
policyholders and, in turn, pay a portion of the healthcare costs when policyholders
seek medical care.

9. 3. Government Involvement: They may provide healthcare services directly through public
hospitals and clinics and private healthcare providers. Government-funded programs like
Medicare (for the elderly) and Medicaid (for low-income individuals) exist in the United States,
4. Pharmaceuticals and Medical Technology: The healthcare economy also includes the
pharmaceutical and medical technology industries. These sectors research, develop, and produce
drugs, medical devices, and equipment. They sell these products to healthcare providers, who
then use them to treat patients.
5. Healthcare Workforce: The healthcare economy relies heavily on a skilled workforce,
including doctors, nurses, technicians, administrators, and support staff. The wages and salaries
of these professionals contribute to the overall economic impact of the healthcare sector.
6. Health Outcomes: Ultimately, the goal of the healthcare economy is to improve health
outcomes for individuals and populations. These outcomes are often measured by factors like life
expectancy, disease prevention, and quality of life.

10. FACTORS INFLUENCING HEALTH ECONOMICS IN INDIA
• Population Size and Demographics: India’s large and diverse population directly impacts
health economics. The healthcare system must cater to the needs of a vast and varied
population, which requires significant resources.
• Disease Burden: the prevalence of diseases, especially non- communicable diseases like
diabetes and cardiovascular diseases, affects healthcare costs. Managing and treating these
conditions can be expensive.
• Health Insurance Coverage: the extent of health insurance coverage in India affects how
healthcare expenses are distributed among individuals, the government, and private
insurers.

11. • Government Policies: government policies and healthcare funding strategies, such as the
National Health Mission and Ayushman Bharat, play a significant role in shaping the
health economics landscape.
• Pharmaceutical Industry: The pharmaceutical industry’s pricing and regulations influence
the cost of medicines and medical supplies.
• Technological advancements: the adoption of new medical technologies and treatments
can lead to increased costs but may also improve health outcomes.
• Medical tourism: India’s popularity as a destination for medical tourism can bring in
foreign revenue but also impacts the domestic healthcare system’s resources and pricing.

12. INDIAN AND INTERNATIONAL HEALTH ECONOMICS
COMPARISON
INDIA
1. Healthcare Expenditure:
• Low healthcare expenditure per capita.
2. Healthcare Systems:
• India has a mixed healthcare system with both public
and private providers.
• The public healthcare system faces challenges related
to access, infrastructure, and quality of care.
• Private healthcare providers are more accessible to
those who can afford them.
INTERNATIONAL
• Typically have higher healthcare expenditures per
capita. (Canada, USA)
• Many developed countries have universal
healthcare systems that provide access to
healthcare services for all citizens, funded through
taxation or social insurance.
• These systems often have well-established
infrastructure and regulations to ensure quality

13. 3. Healthcare Outcomes:
• Key health indicators such as life expectancy and infant
mortality rates have improved but remain below the
international average
4. Healthcare Challenges:
• High disease burden, inadequate healthcare infrastructure
in rural areas, and limited access to essential services for
many citizens.
5. Pharmaceuticals and Medical Tourism:
• India is known for its pharmaceutical industry, which
produces a significant portion of the world's generic drugs.
• Also attracts medical tourists due to lower healthcare costs.
• Have better healthcare outcomes in terms of life
expectancy, lower infant mortality rates, and higher
vaccination rates due to their well-funded and
comprehensive healthcare systems.
• Challenges like rising healthcare costs, an aging
population, and addressing issues like obesity and non-
communicable diseases.
• Have higher drug prices and are known for medical
innovation and research.

14. WHY ECONOMIC PERSPECTIVE IS NECESSARY IN
HEALTHCARE
1. Resource Allocation: Healthcare resources, including funds, healthcare providers, facilities, and
medical supplies, are limited. Economics helps determine how to allocate these resources
efficiently to maximize health outcomes.
2. Cost Control: Healthcare costs can be significant burden on individuals, organizations, and
governments. Economic analysis identifies cost-effective ways to deliver care, reduce waste, and
control healthcare expenditures without compromising quality.
3. Efficiency: Efficiency is a central concept in healthcare economics. It involves minimizing waste,
reducing wait times, and streamlining processes to provide better care at a lower cost.
4. Individual Decision-Making: On a personal level, individuals often make healthcare decisions
based on economic considerations, such as the cost of treatments, insurance coverage, and out-of-
pocket expenses. This affects healthcare utilization and behavior.

15. 5. Evaluation of Health Programs: Economics is used to evaluate the impact and cost-effectiveness
of various health programs, such as vaccination campaigns, disease prevention initiatives, and public
health campaigns.
6. Insurance Design: Economists design health insurance plans that balance affordability for
consumers with financial sustainability for insurers. They consider factors like risk pools, premiums,
and coverage options to create effective insurance policies.

16. CHANGES IN DEMAND FOR HEALTHCARE SERVICES
The demand for healthcare services can change for various reasons, often influenced by factors such as
demographics, socioeconomic conditions, technological advancements, and public health crises.
Here are some common drivers of changes in demand for healthcare services:
1. Population Aging: As the population ages, there is typically an increased demand for healthcare services.
Elderly individuals tend to require more frequent and specialized medical care due to age-related health
conditions.
2. Epidemics and Pandemics: Infectious disease outbreaks, such as the COVID-19 pandemic, can lead to a
sudden surge in demand for healthcare services, including hospitalizations, testing, and vaccinations.
3. Technological Advancements: Advances in medical technology and treatments can create new demand for
healthcare services. For example, the development of new diagnostic tests or therapies may lead to increased
utilization.

17. 4. Health Insurance Coverage: Changes in health insurance policies, such as expanding coverage to
previously uninsured populations, can increase access to healthcare services and, consequently, demand for
those services.
5. Health Awareness and Education: Public health campaigns and education efforts can raise awareness
about specific health conditions or preventive measures, leading to increased demand for screenings,
vaccinations, or lifestyle interventions.
6. Legal and Regulatory Changes: Changes in healthcare laws and regulations, such as the implementation
of new healthcare policies or reforms, can affect the demand for specific services or types of care.
7. Migration and Urbanization: Population movements, including rural-to-urban migration, can influence
healthcare service demand, as urban areas may have better access to healthcare facilities and specialists.

18. FACTORS INFLUENCING HEALTH ECONOMICS IN INDIA
1. Medical Tourism: India is a popular destination for medical tourism due to cost-effective healthcare
services. This sector generates revenue and influences healthcare economics.
2. Public Health Initiatives: Public health campaigns and initiatives, such as immunization drives, affect health
economics by preventing diseases and reducing the demand for treatment.
3. Medical Education and Workforce: The availability and training of healthcare professionals, including
doctors, nurses, and paramedics, influence healthcare access and quality.
4. Technological Advancements: Advances in medical technology and healthcare delivery methods can
increase costs but also improve the quality of care.
5. Government Healthcare Expenditure: The level of government spending on healthcare, both at the central
and state levels, plays a significant role in shaping health economics. Adequate funding is essential to support
public healthcare services.

19. ROLE OF HEALTH INSURANCE IN HEALTH
ECONOMICS
Health insurance plays a pivotal role in health economics by influencing various aspects of healthcare
access, delivery, and financing.
1. Risk Pooling: Health insurance pools the financial risk of healthcare expenses among a large
group of individuals.it reduce the financial impact on individuals.
2. Access to Healthcare: It reduce the financial barriers to seek medical care. Individuals are more
aware for timely medical attention, leading to better health outcomes and early disease
prevention.
3. Healthcare Utilization: Health insurance can influence the utilization of healthcare services.
Insured individuals are more likely to use preventive services, regular check-ups, and
recommended screenings, which can lead to early detection and treatment of health conditions.

20. 4. Government Programs: Government-sponsored health insurance programs, such as Medicaid and
Medicare, have a significant role in health economics by providing coverage to vulnerable populations
and influencing healthcare reimbursement rates.
5. Economic Security: Health insurance provides economic security by protecting individuals and
families from catastrophic medical expenses. Without insurance, individuals may face financial ruin
due to unexpected healthcare costs.