Introduction To Health Economics 0.2in (Hurley, Chapter 1)

Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Introduction to health economicsHealth behavior.Economic analysis.(Hurley, Chapter 1)Chris AuldEconomics 317January 8, 2014

What is health economics?Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.IBest answered by a breakdown of what (U.S.) healtheconomists udystudythe behavior of individualsthe behavior of firmsgovernment policyhealth insuranceoutcomes researchother issuesSimilar in Canada and elsewhere, with less emphasis onfirms.Economic analysis.

Who cares?Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.IHealth economists study issues fundamental to humanwelfare:IIIIIhow do we make decisions which affect our length andquality of life?what government policies could we use to changebehavior which affects health?how could we better provide health care?what other government policies affect health?how does health in turn affect our well-being in otherways, for example, our incomes?Economic analysis.

Why are some people healthier than others?Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.IWhy are some Canadians in 2014 healthier than otherCanadians?IWhy are we healthier in Canada now than in 1713, or1913?IWhy is the average Japanese person healthier than theaverage Canadian?IWe will think about private (e.g., smoking, health care)and social (e.g, income, education) determinants ofhealth.Economic analysis.

human population that I have found are quite close together (with theexception of estimates of population around 5000 BC, where Blaxter (1986)estimates a population some eight times that of other authorities). Note thatHistorical Human PopulationsLecture 1:Introduction tohealth economicsWhat is healtheconomics?10,000Health behavior.Economic analysis.1,000DeeveyMcEvedy and 00100001000100Years Before Present101

Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.Economic analysis.

Economics of health care systems.Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.IHow do markets for insurance work (or not work)?IWhy is health care and/or insurance usually provided bygovernment?IWhy is health insurance so ubiquitous, and what effectsdoes insurance have on behavior?IHow should we pay physicians and other actors in thehealth care system?Economic analysis.

Lecture 1:Introduction tohealth economicsHealth Care Expenditures as a Fraction ofGDP: Selected CountriesWhat is healtheconomics?Health behavior.16.0CanadaFranceGermanyJapan12.0United KingdomUnited 00220042006Percent of GDP Spent on HealthcareEconomic analysis.Source:Cheng and Kenkel, 2010

Lecture 1:Introduction tohealth economicsChapter 2Table 2.1: A Comparison of Health Care Spending and Health Care Utilization in SelectedOECD Countries, 2006Total Health CareTotal HealthPhysicianSpendingCare Spendingvisits per(per capita, USD)(% of and11.33.43,332United Kingdom8.45.16,714United States15.34.0aSource: OECD Health Data (2008); aData from 2005; bData from 2004Acute carehospital daysper capita1.0a0.9a1.01.71.10.90.7Comparing differences across countries in health care spending and health care utilizationhighlights the distinction between monetary measure of activity and real levels of activity andresources. Both the U.S. and Switzerland are the highest spending countries but their citizensreceive fewer physician and hospital services than do citizens of other countries. The reason forthis discrepancy is prices, which are higher in the U.S. and Switzerland. Although they spendmore, they do not necessarily get more.What is healtheconomics?Health behavior.Economic analysis.

Health behaviorLecture 1:Introduction tohealth economicsWhat is healtheconomics?A Tale of Two Cities: Excess mortality in Nevada vs Utah,1959–68Agemale female 142% 351-19162620-39 444230-39 374240-49 546950-59 382860-69 261770-79 206Source: Fuchs, 1974Health behavior.Economic analysis.

various other tobacco control policies were enacted.11Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.Economic analysis.While the longer time period we study does not provide definitive resultsSource:andtaxesKenkel,2010our results show that it is important toaboutthe roleChengof cigaretteor prices,recognize that the influences of key demographic factors on cigarette demand

Health behavior cont.Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.IWhy has the distribution of body weight changed overtime? (slideshow)IWhy do people smoke even when everyone knowssmoking harms health?IWould raising alcohol taxes reduce accidents? Violence?STDs?IWould taxing sugared beverages reduce obesity?IWhat is the government’s role in these decisions?Economic analysis.

Characteristics of economic analysis.Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.1. Emphasize tradeoffs. We cannot have everything wewant.2. Usually assume rationality (jargon!) in models.3. Think at the margin. Example: efficacy of health caresystem.4. Use of models to understand complex systems.5. Heavy use of statistical evidence. Challenge:observational data.Economic analysis.

Example: RAND Health Insurance Experiment.Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.IWhat is the effect of price of care on quantity of careconsumed?IPrice depends on insurance.ICannot just look at the correlation between insurancepurchases and quantity.IExperiment: randomize proportion of price paid bypatient (“coinsurance rate”)Economic analysis.

simdemshohmobecconpaiimdemincLecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.Economic analysis.

Why is health different?Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.Economic analysis.IUncertainty.IAsymmetric information, e.g., your doctor knows morethan you about treatments.INon-profit firms, government price setting.IRestrictions on competition and other regulations.

References.Lecture 1:Introduction tohealth economicsWhat is healtheconomics?Health behavior.Economic analysis.ICheng, K. and D. Kenkel (2010) “U.S. cigarettedemand: 1944–2004,” B.E. Journal of EconomicAnalysis and Policy Vol 10, Issue 1.IFuchs, V. (1974) Who Shall Live? Health, Economics,and Social Choice. New York: Basic Books.

Lecture 1: Introduction to health economics What is health economics? Health behavior. Economic analysis. What is health economics? I Best answered by a breakdown of what (U.S.) health economists do. I 50% study the behavior of individuals I 34% study the behavior of rms I 50% study government policy I 48% study health insurance I 50% study outcomes research I 31% study other issues