Introduction

Question 1

Why is it important to study Health Economics?

Answer 1

Studying Health Economics is essential because it helps policymakers make decisions about resource allocation in the health sector and target limited health services effectively.

Question 2

What role does Health Economics play in suggesting alternative methods?

Answer 2

Health Economics, through economic evaluation studies, suggests alternative methods that can lead to better outcomes or resource savings for the economy

Question 3

Why is knowledge of Health Economics valuable for both health service providers and users?

Answer 3

Users can maximize their utility of health services with limited resources, while providers can optimize resource allocation.

Question 4

How does the structure of the market affect health services?

Answer 4

The structure of the market (e.g., monopoly, oligopoly, perfect competition) plays a pivotal role in determining the price and delivery of health services.

Question 5

How does the World Health Organization (WHO) define health?

Answer 5

The WHO defines health as a state of complete physical and mental well-being, not merely the absence of disease or infirmity

Refer to peoples’ health status (how healthy they are).

Question 6

Why is health considered a highly valued asset?

Answer 6

Health is highly valued because it ranks higher on people’s preference scale, and it is a prerequisite for engaging in other activities. Poor health can limit an individual’s productivity.

Question 7

In what ways is health both a consumption and a production good?

Answer 7

Health is both a consumption good (providing utility) and a production good. Individuals and households can improve their health through health care, diet, physical activity, and more. It is also a crucial part of human capital, increasing productivity and income.

Question 8

Classify the following as either Heath or Healthcare:

1. Life expectancy at birth has reached 71.82 years in 2018.
2. Infant mortality rate:17.9 deaths per 1000 live births.
3. OOP as a % of CHE in Egypt in 2018: 62.3%
4. Number of hospitals in Egypt in 2018: 1848

Answer 8

1. Health
2. Health
3. Healthcare
4. Healthcare

Question 9

Yes or No:

Can health be purchased directly?

Answer 9

No, health cannot be purchased directly

Question 10

What influences the production of health?

Answer 10

Health is influenced by health determinants, which are factors that influence health and illness.

Question 11

What are examples of direct factors that can be purchased directly to influence health?

Answer 11

Examples of direct factors that can be purchased directly to influence health include
* exercise equipment
* healthy foods
* healthcare

Question 12

What is an example of an indirect factor that affects health?

Answer 12

An example of an indirect factor that affects health is air pollution

Question 13

Yes or No:

Is health solely determined by healthcare?

Answer 13

No, health is not solely determined by healthcare; other factors can also influence an individual’s health

Question 14

What are some of the factors that can influence an individual’s health, aside from healthcare?

Answer 14

Factors that can influence an individual’s health include genes, lifestyle choices (such as smoking), living and working environments, diet, activity levels, and income and wealth, which may impact choices related to health

Question 15

What does health care encompass in terms of services?

Answer 15

Health care encompasses a range of services aimed at improving health or reducing the risks of health loss.

Question 16

What are some of the inputs required for health care, aside from labor?

Answer 16

In addition to labor inputs from skilled professionals like physicians and nurses, health care requires non-labor inputs such as capital equipment, including hospitals, beds, diagnostic, and surgical equipment.

Question 17

What does the production function represent in health care?

Answer 17

The production function in health care represents the technology or production process used to combine inputs (e.g., labor and equipment) to produce health outcomes

Question 18

How can decisions about the production function in health care be informed?

Answer 18

Decisions about the choice of the production function in health care should be informed by evidence regarding the differences in outcomes and costs associated with different ways of producing health care services

Question 19

Why is health care not demanded for its intrinsic value?

Answer 19

Health care is not demanded for its intrinsic value because individuals often find it unpleasant, uncomfortable, or painful. Instead, the demand for health care is derived from the demand for the health outcomes it is expected to produce.

Question 20

How do health care providers influence the demand for health care?

Answer 20

Health care providers also influence (or induce) the demand for health care through their role as advisors or agents of the patient.

Question 21

What does health care encompass in terms of services?

Answer 21

Health care encompasses a range of services aimed at improving health or reducing the risks of health loss

Question 22

When did Health Economics emerge as a sub-discipline of economics?

Answer 22

in the 1960s

Question 23

Which two important papers are often associated with the emergence of Health Economics as a sub-discipline?

Answer 23

The two important papers associated with the emergence of Health Economics are:

1. Kenneth Arrow’s 1963 paper, “Uncertainty and Welfare Economics of Medical Care” published in The American Economic Review.
2. Mark Pauly’s 1968 paper, “The Economics of Moral Hazard: Comment” published in The American Economic Review

Question 24

What was the primary focus of Kenneth Arrow and Mark Pauly’s work in the 1960s?

Answer 24

Both Kenneth Arrow and Mark Pauly were primarily concerned with the health care market rather than health or health status in their work during the 1960s

Question 25

What is the central concern of Health Economics?

Answer 25

Health Economics is concerned with the connection between health and the resources consumed in promoting it. It examines the allocation of resources, including money, people, materials, and time, in the context of addressing health-related needs and demands

Question 26

What is the underlying problem that Health Economics addresses?

Answer 26

The underlying problem that Health Economics addresses is the challenge of allocating finite (limited) resources to satisfy almost infinite needs, including health, food, shelter, entertainment, and other types of consumption

Question 27

What does Health Economics apply economic theory and models to analyze?

Answer 27

Health Economics applies economic theory, models, and empirical techniques to analyze decision-making processes related to health and healthcare. This includes decisions made by individuals, healthcare providers, and governments

Question 28

How can Health Economics be defined?

Answer 28

Health Economics can be defined as the application of economic principles to address problems related to health and healthcare. It involves identifying the factors that contribute to individual and population health and determining the most efficient ways to use available resources for health improvement

Question 29

Why do individuals and groups have to make choices regarding their needs?

Answer 29

Individuals and groups have to make choices about their needs because they have finite (limited) resources to satisfy almost infinite needs, and they must prioritize which needs are most important.

Question 30

The importance of Health Economics can be seen through

Answer 30

1. The size of the health economy is large and growing
2. Role of government in the health care markets
3. Health care market is different from other markets
4. Externalities

Question 31

Why is the size of the health economy considered large and growing?

Answer 31

The size of the health economy is considered large and growing because expenditure on healthcare is increasing in developed countries.

Question 32

What is the role of government in healthcare markets?

Answer 32

The government plays a multifaceted role in healthcare markets, including substantial spending on healthcare, involvement in producing and financing healthcare services, and regulating the healthcare industry

Question 33

Why do governments intervene in healthcare markets?

Answer 33

Governments intervene in healthcare markets due to market failures. Some interventions include providing insurance, influencing health behavior, implementing price controls, restricting entry and exit, and subsidizing research.

Question 34

How is the healthcare market different from other markets?

Answer 34

1. Presence of Uncertainty
2. Imperfect Information
3. Large Role of Not-for-Profit Providers
4. Role of Equity and Need

Question 35

Why is the healthcare market characterized by uncertainty, and how does this uncertainty affect healthcare demand and decision-making, especially in cases like accidents and lifesaving care?

Answer 35

The healthcare market is characterized by uncertainty, including uncertainty about who gets sick and how well treatments work. This uncertainty results in irregular and uncertain healthcare demand. In cases like accidents, it raises ethical questions about denying lifesaving care to individuals who lack the financial means to pay for it

Question 36

Why is imperfect information a characteristic of the healthcare market, and what are the implications of this information asymmetry between healthcare providers and patients?

Answer 36

Imperfect information is a characteristic of the healthcare market because there can be significant differences in knowledge between healthcare providers and patients. This information asymmetry can lead to issues such as doctors overprescribing treatments that may not be medically necessary, potentially increasing the doctor’s income. Patients must trust their doctors’ diagnoses, but they may not always know if the doctor is acting in their best interests.

Question 37

Why is the large role of not-for-profit providers in healthcare notable, and how does it challenge the typical economic assumption that firms maximize profits?

Answer 37

The large role of not-for-profit providers in healthcare is notable because it deviates from the typical economic assumption that firms aim to maximize profits. Economists face a modeling challenge when dealing with not-for-profit hospitals, as their primary objective may not be profit maximization

Question 38

What is the role of equity and need in healthcare, and why is it important for economists to consider these factors when studying healthcare markets?

Answer 38

The role of equity and need in healthcare is characterized by the belief that people should have access to healthcare regardless of their ability to afford it. Economists must consider these factors because healthcare is a unique good where societal values place importance on equitable access, and not just profit maximization. Equity and need influence the allocation of resources and decision-making in healthcare.

Question 39

What are externalities in healthcare?

Answer 39

Externalities in healthcare refer to the actions of individuals that impose costs or create benefits for other individuals or society as a whole

They can have both positive and negative effects. Positive externalities include public health programs that reduce disease spread, quarantine programs, and immunization programs. Negative externalities can result from actions like antibiotic use leading to drug-resistant strains or individual behaviors like smoking, which have direct health impacts on the person and can affect healthcare demand and costs.

Question 40

Can you provide examples of positive externalities in healthcare?

Answer 40

xamples of positive externalities in healthcare include public health programs (e.g., clean drinking water) that reduce the spread of diseases, quarantine programs to stop the spread of disease, and immunization programs for children

Question 41

What are negative externalities in healthcare

Answer 41

Negative externalities in healthcare occur when individual actions have adverse effects on others or society

An example mentioned in the text is antibiotic use, which can lead to the development of drug-resistant strains of viruses or bacteria

Question 42

How does individual behavior like smoking create negative externalities in healthcare?

Answer 42

Individual behavior like smoking creates negative externalities by directly impacting the health of the person and others through exposure to secondhand smoke. Additionally, it affects healthcare costs, such as increased premiums and the demand for healthcare services, such as treating lung cancer.