Basics Of Health Economics

Question 1

What is health economics?

Answer 1

Demand is infinite
Resources are scarce
Choices are necessary (opportunity cost)
Prioritisation required
Costs and benefits must be compared

Question 2

What is economics?

Answer 2

The science of scarcity

Question 3

What are the 3 basic economic questions?

Answer 3

1. What goods and services to produce
2. How to produce good and services
3. How to distribute good and services

Question 4

What is a Market economy? (Consumer sovereignty)

Answer 4

-What to produce - determined by consumer preference
-How - determined by profit seeking
- For whom - determined by purchasing power
- If there is a shortage then price goes up

Question 5

What is command economy?
(Communist)

Answer 5

What, how and for whom all decided by government

Question 6

What goods and services to produce?

Answer 6

Opportunity cost
Scarcity and choice
Trade offs
Prioritisation

Question 7

What is opportunity cost?

Answer 7

Benefits forgone by allocating resources to another service

Question 8

What is a trade off?

Answer 8

Trade off between effficiency - universal health care (everyone gets it) or equity - targeted high risk groups only.

Question 9

How is healthcare different from other goods and services?

Answer 9

1. There is no consumer sovereignty (demand might not be best springboard for supply) - this is true in uk context
2. Clinician acts as an agent

Question 10

Distribution of goods and services in healthcare

Answer 10

~ allocative efficiency
~rationing - implicit and explicit
~ rational disinvestment
~ programme budgeting and marginal analysis

Question 11

How to produce goods and services

Answer 11

• technical efficiency - maximise output, minimises resources - cost effectiveness analysis