Health Economics

Health personnel need not learn a great deal of economics in order to understand some of the basic ideas of health economics. What is more important than any particular piece of knowledge is to understand how economists think, particularly how and why they think about markets. Health economics emphasizes some market failures which lead to poor health outcomes or high costs or both, and it concentrates especially on issues of how health care is paid for - the sources of funding, the pooling of those funds to provide protection from financial risk, and their use to purchase goods and services. Better understanding between economists and health professionals can reduce incomprehension and antagonism, and offer opportunities for more efficient …show more content…
More than knowing any particular conclusion of economics, health workers need to understand the way that economists think: incomprehension and conflict arise more from differences in the way the two professions approach questions, than from the specific answers to those questions. An economist does not, contrary to popular superstition, think only or primarily about money, even if he or she often tries to find monetary equivalents of other measures. Economists think about resources, and particularly about whether those resources have prices and if so, whether they are the right prices to assure efficiency or equity. Since resources have costs, whether those are recognized or not, economists want to know if the use of those resources produces effects (non-monetary) or benefits (usually monetized) sufficient to justify how they are used. Much work in economics is devoted to comparisons among these …show more content…
To reject the idea of markets because some market outcomes are inefficient or inequitable or both, is to miss one of the main ideas that economists always carry with them. But markets are not simply theaters in which two characters called "supply" and "demand" interact, important as those two concepts are. Markets are places where people interact, in many different roles, as payers, investors, providers, patients, consumers and citizens; so economists concentrate on the behavior that occurs in markets, and in particular on the incentives that people face to behave one way or another. It is true that economists tend to talk mostly about financial or economic incentives, because they understand those best. That does not mean that other incentives - the desire to help others, professional pride, and so on - do not matter, only that economic analysis starts by taking those for granted, and then asks what happens to behavior when prices, means of payment, regulations or other incentives are modified. Particularly in the health sector, the economic incentives are often perverse, acting contrary to the desired outcomes, so it is crucial to analyze them and correct them if