Health Economics: An Overview
Introduction
A practical discipline of research known as health economics allows an in-depth and methodical examination of the difficulties associated with achieving a healthy society. Health economics applies economic theories of consumer, producer, and social choice to understand better how people, healthcare professionals, public and private organizations, and governments act while making decisions.
What Is The Importance of Health Economics?
Evaluating the idea of health has been the center of some research in health economics. Health is viewed as capital in the Grossman framework under study. Every person is born with a certain amount of health capital, which they may improve by using services given by others in the health sector, eating correctly, exercising, etc. However, as people age and get sick, health capital also deteriorates. The motive for investing in health is vital as health capital tends to be used to get income through employment. Health capital produces rewards over time.
Depending on the specific challenges being experienced, there are various ways to approach healthcare economics. For instance, Harvard Medical School teachers structure the debate in the online course Health Care Economics around six major themes:
Spending growth
The role of the patient
The role of the provider
The impacts of risk and insurance
Benefits design
Payment reform
Spending growth - Both overall and in comparison, medical expenses have been increasing in the US. Anyone working in the sector must have a solid grasp of the factors that influence healthcare spending, how spending differs across locations, and the possible impact of technology.
The role of the patient - The patient is an essential component in what is spent on healthcare, both for themselves and others. Individual patients may drastically impact the system's supply, demand, and cost by picking one medication or treatment over another, choosing elective surgery, or using too much or too little care.
The role of the provider - Healthcare providers are on the supply side of the formula, and patients are on the demand side. The patient's needs are frequently closely linked to the services and treatments that healthcare professionals choose to offer and the prices they charge for them. However, several other elements might affect this choice.
The impacts of risk and insurance - Health insurance is a way for people, businesses, and society in general to manage the costs associated with medical care. It is crucial to thoroughly comprehend risk and risk pools for maintaining healthy insurance markets.
Benefits Design - By encouraging people to choose their medical services in more affordable ways, the design of benefit programs for workers can be a useful tool to minimize the cost of healthcare. For example, a high-deductible health insurance policy may reduce unnecessary spending while still providing insurance in a medical emergency.
Payment Reform - Healthcare professionals can also receive payment for their time and services in various ways. The use of fee-for-service, episode-based, and population-centered payment models can foster efficient provider decision-making.
Conclusion
The economics regulating the medical industry are complex, so specialists regularly have to balance objectives that seem to conflict with each other. The purpose of delivering value to patients by supporting them in living healthier, happier lifestyles is on the one hand, and the responsibility of effectively handling revenues and expenditures is on the other.
Even non-profits participating in the sector must properly finance their operations; otherwise, they go out of business. This remains true regardless of whether it is evident that for-profit hospitals, insurance companies, and other kinds of enterprises are obligated to their shareholders to generate a profit.
In this context, professionals in the entire healthcare industry must recognize the economic factors that drive it. Understanding economics can benefit medical professionals, administrators, healthcare legislators, and even business executives working beyond the sector.
References
https://link.springer.com/book/10.1007/978-3-030-96289-0#toc
https://www.iomcworld.org/open-access/note-on-importance-of-health-economics-84559.html
https://online.hbs.edu/blog/post/what-is-healthcare-economics
Written by Arushi Gupta | Proofread by Yasmin Uzykanova
