Health Economics And Financing

Question 1

Define economics

Answer 1

The study of how men and society end up choosing to employ scarce resources that could have alternative uses
It is about allocating scarce resources
It assists with choosing and decision making

Question 2

Describe scarcity in relation to economics

Answer 2

Scarcity exists since needs, wants, demands or desires will always be greater than resources available to meet them

Scarcity demands that choices must be made as to what healthcare should be provided, how it should be provided, in what quantities and how it might be distributed

Question 3

What is opportunity cost?

Answer 3

Alternative use of any resources
Choosing to use resources in one way will always mean giving up the chance to use them in other desirable ways

Question 4

State the types of economic efficiency

Answer 4

Allocative efficiency
Technical efficiency

Question 5

Describe allocative efficiency

Answer 5

Its the choice of what healthcare to provide
- Strive for maximization of benefits
- Aim to get as much out of a range of healthcare programs as possible
- Need to to compare very different interventions
Think of equity

Question 6

Describe technical efficiency

Answer 6

It’s the choice of how to provide healthcare
- Strive for a minimum input for a given output
- Output/outcome is fixed but input varies

Question 7

Why does an evaluation need to be comparative?

Answer 7

Evaluation needs to be comparative as an intervention can only be labeled as good or bad relative to some benchmark or alternative even if this alternative is a do-nothing strategy
If an evaluation is not comparative and doesn’t consider both costs and consequences, then it is only a partial evaluation. Not informative, simply descriptive.
Unidimensional

Question 8

Define the types of costs

Answer 8

1. Direct costs - immediately associated with an intervention such as staff time, consumables
2. Indirect costs - might include a patients work loss due to treatment
3. Intangible costs - may be things like pain, anxiety, quality of life

Question 9

Why do we discount future costs and benefits to their present day value?

Answer 9

Costs (and benefits) of health care interventions can occur at different times.
Individuals generally prefer to incur costs in the future, and receive benefits sooner.
Given this positive rate of time preference, costs that are incurred in the future should be given less weight(i.e. they should be discounted).
The greater the preference for costs to occur in the future, the higher the discount rate will be