7. Health economics Flashcards
Economics
Economics is the study of how individuals and societies choose to allocate scarce productive resources among competing alternative uses and subsequently to distribute the ‘products‚ from these uses among the members of a society
Health Economics
Health Economics, therefore, is the study of how scarce productive resources are allocated among alternative uses for the care of sickness and the promotion, maintenance and improvement of health.
Scarcity
Scarcity means that there are not, and can never be, enough resources to satisfy all human wants and needs.
Opportunity Cost
Opportunity cost in health economics refers to the value of the next best alternative that must be given up in order to pursue a certain action or decision. In other words, it is the cost of foregone opportunities as a result of choosing one course of action over another.
For example, if a government chooses to invest in a new cancer treatment, the opportunity cost would be the potential benefits that could have been gained by using those resources for another health program or initiative.
Economic profit is equal to
Total income - opportunity cost
Efficiency
get the most out of scarce resources
3 main elements of efficiency
- do not waste resources (technical eff.)
- produce each output at least cost (cost-effective eff.)
- produce the types and amounts of output that people value most (allocative eff.)
Technical Efficiency
The first element of efficiency called technical efficiency requires that for any given amount of output, the amount of inputs used to produce it is minimized.
Cost-effectiveness Efficiency
The second element of efficiency builds on the first but takes into account the relative cost of different inputs. It requires that, in addition to technical efficiency being attained, inputs be combined so as to minimize the cost of any given output.
Allocative Efficiency
Allocative efficiency in economics refers to the allocation of resources in such a way that the economic welfare of society is maximized. This means that the goods and services that are most highly valued by consumers are produced and consumed, and that resources are not wasted on goods and services that are not highly valued.
Economic Evaluation
Economic evaluation is defined as ‘the comparative analysis of alternative courses of action in terms of both their costs and consequences‘.
How are benefits measured? (5)
Data from patients about:
Physical health
Mental health
Social wealth
Health attitudes and behavior
Use of health care
4 types of economic evaluation
Cost minimisation
Cost effectiveness
Cost utility
Cost benefit
QALY measure
QALY is calculated by multiplying the number of years of life obtained by implementing a health program / intervention / treatment with a standardized coefficient / WEIGHT / between 0 and 1 which represents the quality of life related to health during the number of years obtained by implementing a health program / intervention / treatment
0 is the standard measure (PONDER) and means the instantaneous death outcome (death)
1 is a standard measure (PONDER) and means complete health
Cost-benefit analysis is most often done using
the Contingent Valuation option
