Health Economics

1. Introduction. The definition of health, health care and the health care market. 

2. The principle of economic evaluation in health care. Resource constraints, welfare economics, and the importance of economic evaluation. Welfare Economics. 

3. Economic evaluation foundations. Cost-benefit analysis. Cost-utility analysis. Cost-effectiveness. Measuring and Valuing hHealth Care Output. The viewpoint in the analysis. Estimating Costs and Health Gains. Decision making process. Sensitivity and uncertainty analysis.  

4. Demand for health care. Demand and supply of health care. Utility maximisation. 

5. Production, costs, and supply of health care. Production functions and frontiers. Cost Functions. Profit maximisation. 

6. The health care market. Competitive and monopolistic markets. Competitive markets. Market failures. Public intervention in health care. 

7. Other market failures in health care. The supply of healthcare. Monopoly. Externalities. Public Goods. Doctor behaviour models: agency, target income, profit maximization, supplier induced demand. 

8. Market failures & government interventions. Addressing asymmetric and imperfect information: adverse selection and moral hazard. Merit goods. Equity. Health insurance.

9. Time permitting – The environment as a determinant of health, and causal inference. Health insurance and health care financing. Risk and uncertainty. Market for health insurance and market failure.

Knowledge Objectives
By the end of this module, you will gain a comprehensive understanding of:

• The factors influencing the demand for health and health care, including individual and societal considerations.

• The characteristics of health care supply, including production, costs, and delivery systems.

• The functioning of health care markets and the role of market failures, such as externalities and information asymmetry.

• The agency relationship between health care providers and patients, and the implications of supplier-induced demand.

• The ethical, economic, and social justifications for prioritising the health of others in society.

• The principles and methodologies used to evaluate new treatments, drugs, and health interventions.

• The challenges and considerations involved in the rationing of health care resources.

To give you an understanding of:        

• The nature of the demand for health and health care 

• The nature of the supply of health care 

• Markets and market failures in health care

• The agency relationship and the possibility of supplier induced demand 

• Reasons for caring about the health of other people 

• How to evaluate a new treatment or drug 

• Issues in the rationing of health care 

 
Skill Objectives
Throughout this module, you will develop the ability to:

• Effectively apply key microeconomic tools and frameworks to analyse health care issues.

• Provide informed and evidence-based commentary on health policy from an economics perspective.

• Critically evaluate economic analyses of health care technologies, including cost-effectiveness, cost-utility, and cost-benefit assessments.

On successful completion of the module, students will be able to:

• Understand how markets function in theory and recognise how the assumptions of a perfect market are often violated in health care.

• Analyse the doctor-patient agency relationship, using examples from the literature and comparisons across different health care systems.

• Identify the factors that explain variations in health care expenditure and discuss supporting evidence.

• Explain how the demand for health care is derived from the demand for health.

• Define the different types of economic evaluation and determine the situations in which they are most appropriately applied.

• Discuss how the results of economic evaluations can inform resource allocation decisions.

• Identify the factors beyond cost-effectiveness that influence decisions on allocating scarce health care resources.

Teaching is delivered through 10 two-hour sessions. These sessions typically include a combination of lectures, class discussions, and case study analyses. This approach supports the achievement of the module's learning outcomes by facilitating the acquisition of knowledge and facts, while also fostering a critical understanding of the theories and concepts learned and their application to real-world contexts.

Morris, Stephen. (2012) Economic analysis in health care. 2nd ed. Chichester, Wiley. Supplementary

Drummond, M. (2015b) Methods for the economic evaluation of health care programmes. Fourth edition. Oxford, Oxford University Press. Supplementary

Drummond, M. (2015a) Methods for the economic evaluation of health care programmes. Fourth edition /. Oxford, United Kingdom :, Oxford University Press. Supplementary