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Introduction to
Health Economics
Dr. R. Kurinji Malar
Assistant Professor,
PG & Research Department of Economics,
Sacred Heart College (Autonomous,
Tirupattur-635 601, Tamil Nadu, India
 Health Economics is a branch of Economics concerned
with issues related to Efficiency, Effectiveness, Value
and Behaviour in the Production and Consumption
of Health and Healthcare.
 Health economics is important in determining
how to improve health outcomes and lifestyle patterns
through interactions between individuals, healthcare
providers and clinical settings.
 In broad terms, Health Economists study the functioning
of healthcare systems and
health-affecting behaviours such as Smoking, Diabetes,
Cancer and Obesity.
 A seminal 1963 article by Kenneth Arrow is often credited
with giving rise to health economics as a discipline.
 His theory drew conceptual distinctions between health and
other goods.
 Factors that distinguish health economics from
other areas include extensive government intervention,
intractable uncertainty in several dimensions, asymmetric
information, barriers to entry, externality and the presence of
a third-party agent.
 In healthcare, the third-party agent is the patient's health
insurer, who is financially responsible for the healthcare
goods and services consumed by the insured patient.
 Health economists evaluate multiple types of financial
information: costs, charges and expenditures.
• Uncertainty is intrinsic to health, both in patient
outcomes and financial concerns.
• The knowledge gap that exists between a physician
and a patient creates a situation of distinct advantage
for the physician, which is called Asymmetric
information.
• Externalities arise frequently when considering
health and health care, notably in the context of the
health impacts as with infectious disease or opioid
abuse.
• For example, making an effort to avoid catching
the common cold affects people other than the
decision maker or finding sustainable, humane and
effective solutions to the opioid epidemic.
Scope of Health Economics
What influences health? (other than healthcare)
What is health and what is its value?
The demand for healthcare
The supply of healthcare
Micro-economic evaluation at treatment level
Market equilibrium
Evaluation at whole system level

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Introduction to Health Economics Dr. R. Kurinji Malar.pptx

  • 1. Introduction to Health Economics Dr. R. Kurinji Malar Assistant Professor, PG & Research Department of Economics, Sacred Heart College (Autonomous, Tirupattur-635 601, Tamil Nadu, India
  • 2.  Health Economics is a branch of Economics concerned with issues related to Efficiency, Effectiveness, Value and Behaviour in the Production and Consumption of Health and Healthcare.  Health economics is important in determining how to improve health outcomes and lifestyle patterns through interactions between individuals, healthcare providers and clinical settings.  In broad terms, Health Economists study the functioning of healthcare systems and health-affecting behaviours such as Smoking, Diabetes, Cancer and Obesity.
  • 3.  A seminal 1963 article by Kenneth Arrow is often credited with giving rise to health economics as a discipline.  His theory drew conceptual distinctions between health and other goods.  Factors that distinguish health economics from other areas include extensive government intervention, intractable uncertainty in several dimensions, asymmetric information, barriers to entry, externality and the presence of a third-party agent.  In healthcare, the third-party agent is the patient's health insurer, who is financially responsible for the healthcare goods and services consumed by the insured patient.  Health economists evaluate multiple types of financial information: costs, charges and expenditures.
  • 4. • Uncertainty is intrinsic to health, both in patient outcomes and financial concerns. • The knowledge gap that exists between a physician and a patient creates a situation of distinct advantage for the physician, which is called Asymmetric information. • Externalities arise frequently when considering health and health care, notably in the context of the health impacts as with infectious disease or opioid abuse. • For example, making an effort to avoid catching the common cold affects people other than the decision maker or finding sustainable, humane and effective solutions to the opioid epidemic.
  • 5. Scope of Health Economics What influences health? (other than healthcare) What is health and what is its value? The demand for healthcare The supply of healthcare Micro-economic evaluation at treatment level Market equilibrium Evaluation at whole system level