Health vs Healthcare
Distinguish between health as an outcome and healthcare as a service, and their economic implications.
Health Status
Medical Services
Well-being
Health refers to an individual's overall physical, mental, and social well-being, while healthcare refers to the services provided to maintain or improve health. This distinction is crucial for understanding how economic factors affect both health outcomes and healthcare delivery.
# Health vs Healthcare Framework
health_healthcare = {
"health": {
"definition": "State of physical, mental, and social well-being",
"characteristics": ["Outcome", "Stock variable", "Multidimensional"],
"determinants": {
"medical_care": "10-20% of health outcomes",
"lifestyle": "40-50% (diet, exercise, smoking)",
"genetics": "20-30% of health variation",
"social_environment": "15-20% (education, income)",
"physical_environment": "5-10% (air, water quality)"
},
"measurement": ["Life expectancy", "Mortality rates", "Quality of life"]
},
"healthcare": {
"definition": "Services to maintain, restore, or improve health",
"characteristics": ["Input", "Flow variable", "Service-based"],
"components": {
"preventive": "Vaccines, screenings, health promotion",
"curative": "Treatment of illness and injury",
"rehabilitative": "Restoration of function",
"palliative": "End-of-life care and comfort"
},
"measurement": ["Healthcare spending", "Utilization rates", "Access measures"]
},
"economic_implications": {
"health_as_investment": "Human capital approach",
"healthcare_as_consumption": "Utility-maximizing behavior",
"production_relationship": "Healthcare is one input to health production"
}
}
Healthcare Market Failures
Identify the unique characteristics of healthcare markets that lead to market failures.
Key Healthcare Market Failures:
• Information asymmetries between providers and patients
• Uncertainty about need for and effectiveness of care
• Externalities in health (communicable diseases)
• Insurance market problems (adverse selection, moral hazard)
Why Healthcare Markets Differ:
Healthcare markets violate many assumptions of perfect competition, including perfect information, rational consumers, and normal goods characteristics, leading to government intervention.
# Healthcare Market Failure Analysis
market_failures = {
"information_asymmetry": {
"problem": "Patients lack medical knowledge",
"consequences": ["Supplier-induced demand", "Quality uncertainty"],
"solutions": ["Professional licensing", "Quality reporting", "Guidelines"]
},
"uncertainty": {
"types": ["Need uncertainty", "Treatment effectiveness", "Cost uncertainty"],
"impact": "Demand for insurance and risk-sharing",
"market_response": "Insurance markets develop"
},
"externalities": {
"positive": ["Vaccination", "Research spillovers", "Herd immunity"],
"negative": ["Antibiotic resistance", "Disease transmission"],
"policy_responses": ["Subsidies", "Mandates", "Regulations"]
},
"public_good_characteristics": {
"examples": ["Disease surveillance", "Health research", "Emergency preparedness"],
"problem": "Under-provision by private markets",
"solution": "Government provision or funding"
},
"equity_concerns": {
"access_issues": "Ability to pay affects access to care",
"health_disparities": "Income and health are correlated",
"policy_justification": "Healthcare as a right or merit good"
}
}
Economic Evaluation Methods
Learn the main approaches to evaluating the economic value of healthcare interventions.
Types of Economic Evaluation:
• Cost-minimization: Compare costs when outcomes are equivalent
• Cost-effectiveness: Compare costs per unit of health outcome
• Cost-utility: Compare costs per quality-adjusted life year (QALY)
• Cost-benefit: Compare costs and benefits in monetary terms
Evaluation Challenges:
• Measuring health outcomes and quality of life
• Valuing life and health improvements
• Handling uncertainty and time preferences
• Incorporating equity considerations
# Economic Evaluation Framework
evaluation_methods = {