HEALTH ECONOMICS

1. Health economics

2. CONTENT
• Introduction - Economics
• Definition of Economics
• Positive and Normative Science
• What is Health Economics?
• Definition of Health Economics
• Concepts of Health Economics
• Features of Health Economics
• Need of Health Economics
• Factors determining Health Economics
• Conclusion

3. ECONOMICS - INTRODUCTION
The word Economics derived from a Greek word as ‘OKIO’ &
‘NOMICUS’ which means ‘Household management’ or ‘Theory
of management’.
The term Economics was first read in ancient Greece.
Adam Smith belongs to Classical School economics termed
Economics as the ‘Science of Wealth’.
Adam Smith called as the ‘Father of Economics’.

4. What is economics - ?
•The economics is the science that deals with the
consequences of resources scarcity.
•Economics as a social science studies how people
perform economic activities and how they try to
satisfy unlimited wants by the proper use of limited
resources.
•The discipline of economics deals with use of scarce
resources to satisfy human wants and needs how
best to use the resources available.

5. DEFINITIONS
• Definition of Economics – By
Adam Smith - Study of Wealth
Alfred Marshall - Study of Welfare
Lionel Robbins - Study of Scarcity

6. WEALTH DEFINITION – ADAM SMITH
Wealth Definition - Adam Smith
Adam Smith defined economics as “ An enquiry into the Nature and Causes
of the “Wealth of Nations”.
Welfare Definition – Alfred Marshall
Alfred Marshall defined economics as “ political economy or economics is a
study of mankind in the ordinary business of life”. He gave importance to
man on one side and on other side importance given to wealth.

7. DEFINITION
Scarcity Definition - Lionel Robbins
Lionel Robbins defined economics as “ The science which studies
human behaviour as relationship between the ends and scares which
have alternative uses”.

8. POSITIVE & NOMATIVE SCIENCE

9. POSITIVE & NOMATIVE SCIENCE
• Positive Science : Explains ‘what it is’ ? It explains what is
good and bad.
• Normative science: Explains “What ought to be”?. It wont
explains what is good and bad.

10. What is health ?
Health economics is a study of all financial aspects and
their distribution of healthcare system.
It is a branch of economics concerned with issues related
to effectiveness, efficiency, value and behavior in the
production and consumption of health and healthcare.

11. HEALTH
Health evaluation is a kind of Measure for health status.
According to World health organization (WHO) health is “a state
of complete physical, mental and social well being and not merely
absence of disease or disability”.

12. health economics
• Health Care Dilemma
Supply
Demographic Increasing Technological
Changes Expectations advancement
DEMAND EFFECTIVE
DON’T KNOW
INEFFECTIVE

13. health economics
•Health care is the maintenance of health through the
prevention, diagnosis, treatment, recovery, illness,
injury, and other physical and mental impairments of
the people.
•It is the branch of economics concerned with
application of economic theory and the problems related
with health and healthcare .
•It shows the allocation of resources within the health
system and functioning of healthcare market in the
economy.

14. Continue…
• Health economics is a study of how scarce resources are
allocated with alternative uses for sickness and to
maintain their health with the help of health related
services.
•Health economics deals with the purpose and plans how
much budget is required in the health care delivery
system.
•The demand for healthcare comes from the desire of the
consumers to gain good health.

15. Continue…
•Health Economics concerns:
• Minimum resources used in health service delivery over
a period of time.
•Efficiency of resources allocated and used for health
purposes.
• Health Economics concerns about the various effects of
health services upon health and for the welfare of the
population.

16. Concepts in health economics
•Macro Economics studies of total economic process
rather than single parts. It covers production,
consumption and distribution of goods and services for
economy as a whole.
• Micro Economics studies individual behavior in decision
making units. It covers consumption, production and
distribution by an individual.
•Health under microeconomics is concerned with how
individuals choose minimize cost or maximize profits
within a given healthcare with given rules and prices.

17. Features of health economics
•Health and medical care is considered as
economic goods.
•Health is a private or public good.
•Measurement of health is also considered
in economics .
•It is a stock of health.
•It covers investment aspects of health.

18. Continue….
•Minimizing the loss due to ill health.
•Resource cost of various different diseases
effects of health and medical care provision.
•Planning of health and medical care.
•Choice of Technology in health care system.
•Provision of equity in health outcomes and
health care.

19. ECONOMIC GOODS IN HEALTH CARE
• Health and medical care.
• Measurement of health.
• Health as a private or a public good.
• Burden of diseases.
• Investment aspects of healthcare industry.
• Choice of technology in healthcare system.
• Effect of healthcare provision.

20. NEED FOR MEDICAL CARE

21. Factors influencing health economics
•Extensive government intervention.
•Intractable uncertainty in several dimensions.
•Information about lop sides.
•Externalities and the presence of third party
agents.
•Barriers to entry.

22. RELEVANCE OF HEALTH ECONOMICS
• Relevance of Health Economic analysis will help both directly and
indirectly:
Directly:
• It clarify the choices for health policy.
• Choosing among different health services.
• It decide what to buy and how to pay for it.
• It evaluate the end results out of consumption.
Indirectly:
• It take decision between the out of pocket payment or insurance.
• It covers population health and welfare.

23. IMPORTANCE OF HEALTH ECONOMICS
To formulate various health services needed for the
people.
To establish the true costs of delivering health care
for the public welfare.
 To evaluate the relative costs and benefits of
particular policy options.
To estimate the effects of few economic variables on
the utilization of health services.

24. CONCLUSION
Both physical and mental health have strong connections.
Mental health is equally important along with physical
health to maintain full active lifestyle.
Mental health refers to a person’s emotional, social, and
psychological well-being. A person who have good physical
health should keep their body functions fit. The best way to
maintain health is to preserve it through a healthful lifestyle
rather than waiting until sickness to address health
problems. People generally use the name wellness to
describe this continuous state of improved well-being.