Definitions

Question 1

Externalities

Answer 1

No control - puts more pressure on healthcare e.g Covid
Vaccinations can reduce externalities through herd immunity

Question 2

Moral hazard

Answer 2

Consumer moral hazard - reduced cost to patient results in increased and maybe unnecessary use. E.g UK

Provider moral hazard - more use of x-rays, drugs, therapy that may not be needed. E.g. USA

Question 3

Categories of cost

Answer 3

Direct medical costs = wages, equipment, drugs
Direct non- medical = incurred by patients and families
Indirect = losses in production to to absences
Intangible = psychological cost to patients and families

Question 4

Agency relationship

Answer 4

The principal = patient or family
Agent = health care professional
Agent as expert who advises patient what treatment they need based on their assessment and diagnosis
Information asymmetry

Question 5

Allocative efficiency

Answer 5

Allocation of resources between types of health services for maximum gain to everyone e.g. CBA

Question 6

ICER

Answer 6

• Incremental cost effectiveness ratio
• It tells us what the difference effectiveness is of one treatment over another
• the effect is usually measured in QALY’s or life years gained
  Calculation cost (a) - cost (b)
  —————————————
  Effect (a) - effect (b)

Question 7

Opportunity cost

Answer 7

Benefits forgone by allocating resources to one service rather than another

Question 8

Technical efficiency

Answer 8

Use of healthcare resources that maximises output from given resources or minimises cost e. CEA

Question 9

Discreet choice experiment

Answer 9

Individuals rank different real work scenarios consisting of several dimensions e. Would you rather have this or this. Helps us to undertake uptake of intervention or characteristics of change in behaviour

Question 10

Implicit rationing

Answer 10

Using budgets to ration health care rather than being transparent

Question 11

Explicit rationing

Answer 11

Explicit setting a limit e. No kidney transplants for people over 61
Or no TkR for people over a certain BMI

Question 12

What is Discounting

Answer 12

• Adjusts the costs and benefits that occur in the future to represent current value
• based on the principle that people prefer the benefits sooner and to delay the costs later
• nice recommends 3.5% or 1.5% for public health interventions