Case 1: The economic approach of healthcare
Learning goals
1. What is health economics?
2. What are the key concepts of health economics and what is the relationship between the
different concepts?
3. Where does health economics come from?
4. What are the developments in the current and future of health economics?
5. What are different theories and paradigms in health economics?
6. Why does healthcare economy matter for healthcare and the insurance industry?
7. What is the difference between economics and health economics?
Keywords of the case
Scarcity, preferences, utility, choice, allocation, allocative efficiency, competition, demand and
supply, economics, efficiency, health care economics, health economics, market, market failure,
pareto-optimality, resources, behavioural economics and experimental economics.
Literature
- Arrow, K. J. (2001). Uncertainty and the welfare economics of medical care. 1963. Journal of health
politics, policy and law, 26(5), 851-883.
- Savedoff, W. D. (2004). Kenneth Arrow and the birth of health economics. Bulletin of the World
Health Organization, 82(2), 139-140
- Culyer, A. J., & Newhouse, J. P. (2000). Introduction: The State and Scope of Health Economics. In A.
J. Culyer & J. P. Newhouse (Eds.), Handbook of health economics Vol. 1A (pp. 1-8). Amsterdam:
Elsevier. SL W 74
- Edwards, R. T. (2001). Paradigms and research programmes: is it time to move from health care
economics to health economics?. Health economics, 10(7), 635- 649.
- Maynard, A., & Kanavos, P. (2000). Health economics: an evolving paradigm. Health economics,
9(3), 183-190.
- Pedersen, K.M. (2012), A New Paradigm for Health Economics? Nordic Journal of Health Economics,
Volume 1, no 1: pp. 17-27.
- Hansen et al. (2015). The future of health economics: The potential of behavioural and
experimental economics. Nordic Journal of Health Economics. 3(1): 68-86.
- Jakovijevic, M. & S. Ogura (2016), Health Economics at the Crossroads of Centuries – From the past
to the future. Frontiers in Public Health, 4(15), doi: 10/3389/pubh/2016.00115
, 1. What is health economics?
Definition of economics
- Study of choices under conditions of scarcity
- Unlimited needs, limited resources
à Economics is the study of how our society as a whole, uses its resources.
All societies face three fundamental questions:
1. What to produce?
2. How to produce what to be produced?
3. How to distribute what is to be produced between individual citizens?
What do economists do?
They study the choices people make and what are the most efficient choices:
Explain how our economic system works; forecast the future of our economy & suggest to make the
future even better.
Health economics
- Health economics in an applied field of economics;
- Health economics studies the choices/ behaviour of individuals, health care providers, public
and private organization, and governments in health decision-making;
- Study of how (scarce) resources are allocated to and within the healthcare system.
Examples of question in health economics:
- How do we distribute healthcare within the population?
- How much money should the government spent on healthcare?
- How to efficiently allocate scarce healthcare resources?
Health economics is based on four traditional areas of economics
- Finance and insurance
- Industrial organisation
- Labour
- Public finance
Learning goals
1. What is health economics?
2. What are the key concepts of health economics and what is the relationship between the
different concepts?
3. Where does health economics come from?
4. What are the developments in the current and future of health economics?
5. What are different theories and paradigms in health economics?
6. Why does healthcare economy matter for healthcare and the insurance industry?
7. What is the difference between economics and health economics?
Keywords of the case
Scarcity, preferences, utility, choice, allocation, allocative efficiency, competition, demand and
supply, economics, efficiency, health care economics, health economics, market, market failure,
pareto-optimality, resources, behavioural economics and experimental economics.
Literature
- Arrow, K. J. (2001). Uncertainty and the welfare economics of medical care. 1963. Journal of health
politics, policy and law, 26(5), 851-883.
- Savedoff, W. D. (2004). Kenneth Arrow and the birth of health economics. Bulletin of the World
Health Organization, 82(2), 139-140
- Culyer, A. J., & Newhouse, J. P. (2000). Introduction: The State and Scope of Health Economics. In A.
J. Culyer & J. P. Newhouse (Eds.), Handbook of health economics Vol. 1A (pp. 1-8). Amsterdam:
Elsevier. SL W 74
- Edwards, R. T. (2001). Paradigms and research programmes: is it time to move from health care
economics to health economics?. Health economics, 10(7), 635- 649.
- Maynard, A., & Kanavos, P. (2000). Health economics: an evolving paradigm. Health economics,
9(3), 183-190.
- Pedersen, K.M. (2012), A New Paradigm for Health Economics? Nordic Journal of Health Economics,
Volume 1, no 1: pp. 17-27.
- Hansen et al. (2015). The future of health economics: The potential of behavioural and
experimental economics. Nordic Journal of Health Economics. 3(1): 68-86.
- Jakovijevic, M. & S. Ogura (2016), Health Economics at the Crossroads of Centuries – From the past
to the future. Frontiers in Public Health, 4(15), doi: 10/3389/pubh/2016.00115
, 1. What is health economics?
Definition of economics
- Study of choices under conditions of scarcity
- Unlimited needs, limited resources
à Economics is the study of how our society as a whole, uses its resources.
All societies face three fundamental questions:
1. What to produce?
2. How to produce what to be produced?
3. How to distribute what is to be produced between individual citizens?
What do economists do?
They study the choices people make and what are the most efficient choices:
Explain how our economic system works; forecast the future of our economy & suggest to make the
future even better.
Health economics
- Health economics in an applied field of economics;
- Health economics studies the choices/ behaviour of individuals, health care providers, public
and private organization, and governments in health decision-making;
- Study of how (scarce) resources are allocated to and within the healthcare system.
Examples of question in health economics:
- How do we distribute healthcare within the population?
- How much money should the government spent on healthcare?
- How to efficiently allocate scarce healthcare resources?
Health economics is based on four traditional areas of economics
- Finance and insurance
- Industrial organisation
- Labour
- Public finance
