Summary Chapter 1, Introduction (Mattias Fritz)




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Summaries of the literature in the course


9813 Health Economics


Spring 2003


Editor: Fredrik Nilsson, 18310


Table of content


Folland, S., Goodman, AC., Stano, M. The economics of health and health care. 3rd edition, 2001


Chapter Page

1.    Mattias Fritz 3

2.    Mattias Fritz 4

3.    Peter Olofsson 8

5.    Peter Olsson 13

6.    Marcus Pettersson 17

7.    Clemens Bomsdorfs 20

8.    Fredrik Borg 25

10.  Emma Ringbom 29

12.  Katarina Hellberg 35

19.  Tobias Perdahl 37

20.  Helena Nordenstedt 40

22.  Martin Neovius 42

23.  Johan Ejerhed 47

9.    Zvonimir Cogelja 71


Articles

 

Wagstaff A, The demand for health...                  Pulin Milintachinda 51
Journal of Epidemiology and Com
Health 1986;40:1-11 

 

Jönsson B, Eckerlund I,                                        Erik Mohlin 56

Why do different countries spend different
amounts on health care? OECD, forthcoming

 

Johannesson M,                                                   Nicklas Pettersson 59

Theory and Methods of economic evaluation
of health care, Boston: Kluwer
Academic Publishers: 1996:173-192

 

 Johannesson M, Weinstein MC,                           Christofer Ohlsson 63

Designing and conductiong
cost-benefit analysis. In Qualtiy
 

Johannesson M                                                    Fredrik Nilsson 68

At what coronary risk level is it costeffective...,

European Heart Journal
2001;22:919-925


Karlsson G, Johannesson M,                                 Åsa Carlsson 73

The decision rules of cost-effectiveness
analysis, PharmacoEconomics
1996;9:113-120

Summary Chapter 1, Introduction (Mattias Fritz)


Folland, S., Goodman, AC., Stano, M. The economics of health and health care. Third edition, 2001


Health economy is “the study of the allocation of resources to and within the health economy”.

The Relevance of Health Economics


The spending on health care has increased a lot during the past 40 years. Today, US consumers spend about 5 times more money on health care than in 1960. More than 11 million people are employed within the health care industry which is more than twice the amount in 1970.


The study of health economy is important due to three major aspects; (1) The size of health economy in relation to the whole economy, (2) the national policy concerns concerning the health of the people and (3) many health issues have a substantial economic element.

Health Economics Analysis


When analysing health economy, four distinctive features can be identified. These are often found within microeconomics:


  • The assumption of rationality The decision maker is assumed to be rational

  • The use of abstraction Abstract models are used to explain reality

  • The use of marginal analysis The marginal cost and benefit are often crucial

  • The use of models as metaphors Models are used as metaphors for reality.


Health economy is unique in the sense that consumers often depend on health providers and health providers often prescribe treatments no matter what costs are. However, despite this, research has shown that economic incentives do matter. The unique about health care is that it has a combination of distinctive features:


  1. Uncertainty: Consumers are uncertain of their health status which means that demand for health care is irregular in nature from the individual’s perspective.

  2. Prominence of Insurance: Insurances weaken the price effect and change the demand for care.

  3. Problems of Information: Asymmetric information is common within health care.


Furthermore, the market is characterised by the existence of several non-profit institutions such as hospitals, insurers etc. Moreover, competition is restricted in different ways such as restrictions on advertising, licensure requirements for providers etc.

Because of these features, there is an ongoing discussion whether economics can be applied to health care.
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