Health Economics and Policy
Lecture Notes 2021-2022
, 2
TABLE OF CONTENTS
LECTURE 1: INTRODUCTION ON HEALTH ECONOMICS & POLICY ................... 3
LECTURE 2: HEALTH POLICY I....................................................................................... 7
LECTURE 3: HEALTH POLICY II ................................................................................... 14
LECTURE 4: HEALTH DISPARITIES I........................................................................... 20
LECTURE 5: HEALTH DISPARITIES II ......................................................................... 27
LECTURE 6: LONG-RUN EFFECTS I ............................................................................. 34
LECTURE 7: RESEARCH METHODS LONG-RUN EFFECTS II ............................... 39
LECTURE 8: EFFECTS OF CHILDHOOD CONDITIONS ........................................... 44
LECTURE 9: TEEN CHILDBEARING ............................................................................. 49
LECTURE 10: HYPERBOLIC DISCOUNTING AND HEALTH (LECTURE 2020) .. 57
LECTURE 10: BEHAVIOURAL HEALTH ECONOMICS (LECTURE 2021) ............ 61
LECTURE 11: HEALTH SYSTEM COMPARISON ....................................................... 68
, 3
LECTURE 1: INTRODUCTION ON HEALTH ECONOMICS &
POLICY
Healthcare is quite commonly discussed in the media in different facets, e.g., organization,
funding, performance, or policy. Other examples include COVID-19 policy. In this course:
we dive deeper into policy debates and the underlying core assumptions and limitations behind
policies on a strategic level.
Health in the Media:
- The COVID-19 virus has had a very large impact on healthcare systems and placed a
strenuous burden on these systems.
- Demographic shift to non-communicable diseases (NCDs) that are becoming more
prevalent due to 1) an aging population and 2) medical advancements.
An example of diving into COVID policies:
There is a big difference in the onset of the pandemic and the current number of new infections
per day on country-level (see slide 4). What could cause this? è Low quantity of testing
In-between country analysis can demonstrate the effects of different policies that have been
taken (e.g., Germany vs. NL). An evaluative analysis can be made by comparing countries’
excess mortality per year per country.
- An increased excess mortality indicate that COVID-19 caused these extra deaths.
- Negative excess mortality could have been caused by lockdown measures (no other
diseases were being spread, no accidents).
Accumulation of the excess mortality graph (slide 5) leads to conclude that significantly more
people will have died in those countries.
ð Limitation: this does not capture postponed care that may had adverse long-term
effects.
In NL, the ICU bed occupancy was seen as a critical measurement factor. Drawing on the
vaccination coverage, in the media Urk and Staphort are mentioned quite a bit, but not a
significant proportion of the hospital population comes from these areas. COVID-19 has
impacted the national healthcare systems on a significant scale, and in the course, we employ
it as a case to see how the elements of care systems are put into practice.
What is Health?
Definition 1: “Health is a state of complete physical, mental and social well-being and not
merely the absence of disease or infirmity.”, WHO, 1948
- Definition was made after WW II and was revolutionary to indicate that health is
more than the absence of sickness.
- Limitations include that life-expectancy and cause of death statistics give a limited
picture of disease burden:
o the current epidemiological phase is characterized by chronic diseases
§ they reduce quality of life without necessarily shortening the lifespan.
- To measure burden of disease whilst living we can use disability adjusted life years
(DALYs).
o Combination of years of life lost due to a condition with the disability weight
of living with a condition è ranges from 0 (perfect health) to 1 (death).
, 4
However, disabilities are increasingly observed in all aging categories (except infants
between 0 and 4 years), thus, according to the WHO, the population generally is disabled.
Mental healthcare problems are observed more in early life years as opposed to older ages,
thus, the population generally has mental healthcare problems.
Viewing health over the life cycle reveals that we are never completely free of disease è
according to the WHO definition this implies that we are always sick.
- Many conditions may reduce our quality of life, yet we can still handle them given
our own qualities and the resources provided by the healthcare system è so maybe
we should also have a different definition of health.
Definition 2: “The ability to adapt and self-manage in the face of social, physical, and
emotional challenges.” Huber et al. (2011, BMJ)
- Definition is more “positively-oriented”, however, has limitations.
- If individuals can adapt, what is the rational for health policy? è Very individualistic
point of view.
Definition 3: “Confidence and ability to be effective in achieving optimal health given
biologic and genetic disposition; intermediate and the broader social, political, and
economic environment; and access to the public health and health care system.” Prah Ruger
(2010, AJPH)
- Encompasses all elements that influence the health of a population (including social
determinants).
- The objective of health policy is to enable individuals to gain confidence and ability
in achieving optimal health.
- What if individuals have the ability to be healthy but choose to be unhealthy?
o Definition infers that health policy enables people to be healthy, what
individuals do is their own decision.
History of Health Policy
For us, it does not make sense to understand a healthcare system in a very detailed way. Instead,
it adapts to a constant changing environment. Most countries in the world have some form of
healthcare system:
- Can be various combinations of public and private parties;
- Every country tends to have a quite unique structure making health policy an intricate
policy issue;
o Substantial differences can be, for example, observed between the UK and US.
- Regardless of financing, healthcare spending makes up a large share of private and
public spending.
The justifications for Health Policy include:
- Market failure argument: Without some form of (government) intervention healthcare
markets are prone to break down.
o These failures occur as a cause of insurers.
- Public Goods approach to (Public) Health:
o Good public health is a pre-requisite for a productive economy, yet nobody
individually “owns” public health.
o In line with IHCO argumentation, this is a civic argument for healthcare
promotion.
- Human Rights argument (Universal Declaration of Human Rights, UHDR):
“Everyone has the right to a standard of living adequate for the health and well- being
Lecture Notes 2021-2022
, 2
TABLE OF CONTENTS
LECTURE 1: INTRODUCTION ON HEALTH ECONOMICS & POLICY ................... 3
LECTURE 2: HEALTH POLICY I....................................................................................... 7
LECTURE 3: HEALTH POLICY II ................................................................................... 14
LECTURE 4: HEALTH DISPARITIES I........................................................................... 20
LECTURE 5: HEALTH DISPARITIES II ......................................................................... 27
LECTURE 6: LONG-RUN EFFECTS I ............................................................................. 34
LECTURE 7: RESEARCH METHODS LONG-RUN EFFECTS II ............................... 39
LECTURE 8: EFFECTS OF CHILDHOOD CONDITIONS ........................................... 44
LECTURE 9: TEEN CHILDBEARING ............................................................................. 49
LECTURE 10: HYPERBOLIC DISCOUNTING AND HEALTH (LECTURE 2020) .. 57
LECTURE 10: BEHAVIOURAL HEALTH ECONOMICS (LECTURE 2021) ............ 61
LECTURE 11: HEALTH SYSTEM COMPARISON ....................................................... 68
, 3
LECTURE 1: INTRODUCTION ON HEALTH ECONOMICS &
POLICY
Healthcare is quite commonly discussed in the media in different facets, e.g., organization,
funding, performance, or policy. Other examples include COVID-19 policy. In this course:
we dive deeper into policy debates and the underlying core assumptions and limitations behind
policies on a strategic level.
Health in the Media:
- The COVID-19 virus has had a very large impact on healthcare systems and placed a
strenuous burden on these systems.
- Demographic shift to non-communicable diseases (NCDs) that are becoming more
prevalent due to 1) an aging population and 2) medical advancements.
An example of diving into COVID policies:
There is a big difference in the onset of the pandemic and the current number of new infections
per day on country-level (see slide 4). What could cause this? è Low quantity of testing
In-between country analysis can demonstrate the effects of different policies that have been
taken (e.g., Germany vs. NL). An evaluative analysis can be made by comparing countries’
excess mortality per year per country.
- An increased excess mortality indicate that COVID-19 caused these extra deaths.
- Negative excess mortality could have been caused by lockdown measures (no other
diseases were being spread, no accidents).
Accumulation of the excess mortality graph (slide 5) leads to conclude that significantly more
people will have died in those countries.
ð Limitation: this does not capture postponed care that may had adverse long-term
effects.
In NL, the ICU bed occupancy was seen as a critical measurement factor. Drawing on the
vaccination coverage, in the media Urk and Staphort are mentioned quite a bit, but not a
significant proportion of the hospital population comes from these areas. COVID-19 has
impacted the national healthcare systems on a significant scale, and in the course, we employ
it as a case to see how the elements of care systems are put into practice.
What is Health?
Definition 1: “Health is a state of complete physical, mental and social well-being and not
merely the absence of disease or infirmity.”, WHO, 1948
- Definition was made after WW II and was revolutionary to indicate that health is
more than the absence of sickness.
- Limitations include that life-expectancy and cause of death statistics give a limited
picture of disease burden:
o the current epidemiological phase is characterized by chronic diseases
§ they reduce quality of life without necessarily shortening the lifespan.
- To measure burden of disease whilst living we can use disability adjusted life years
(DALYs).
o Combination of years of life lost due to a condition with the disability weight
of living with a condition è ranges from 0 (perfect health) to 1 (death).
, 4
However, disabilities are increasingly observed in all aging categories (except infants
between 0 and 4 years), thus, according to the WHO, the population generally is disabled.
Mental healthcare problems are observed more in early life years as opposed to older ages,
thus, the population generally has mental healthcare problems.
Viewing health over the life cycle reveals that we are never completely free of disease è
according to the WHO definition this implies that we are always sick.
- Many conditions may reduce our quality of life, yet we can still handle them given
our own qualities and the resources provided by the healthcare system è so maybe
we should also have a different definition of health.
Definition 2: “The ability to adapt and self-manage in the face of social, physical, and
emotional challenges.” Huber et al. (2011, BMJ)
- Definition is more “positively-oriented”, however, has limitations.
- If individuals can adapt, what is the rational for health policy? è Very individualistic
point of view.
Definition 3: “Confidence and ability to be effective in achieving optimal health given
biologic and genetic disposition; intermediate and the broader social, political, and
economic environment; and access to the public health and health care system.” Prah Ruger
(2010, AJPH)
- Encompasses all elements that influence the health of a population (including social
determinants).
- The objective of health policy is to enable individuals to gain confidence and ability
in achieving optimal health.
- What if individuals have the ability to be healthy but choose to be unhealthy?
o Definition infers that health policy enables people to be healthy, what
individuals do is their own decision.
History of Health Policy
For us, it does not make sense to understand a healthcare system in a very detailed way. Instead,
it adapts to a constant changing environment. Most countries in the world have some form of
healthcare system:
- Can be various combinations of public and private parties;
- Every country tends to have a quite unique structure making health policy an intricate
policy issue;
o Substantial differences can be, for example, observed between the UK and US.
- Regardless of financing, healthcare spending makes up a large share of private and
public spending.
The justifications for Health Policy include:
- Market failure argument: Without some form of (government) intervention healthcare
markets are prone to break down.
o These failures occur as a cause of insurers.
- Public Goods approach to (Public) Health:
o Good public health is a pre-requisite for a productive economy, yet nobody
individually “owns” public health.
o In line with IHCO argumentation, this is a civic argument for healthcare
promotion.
- Human Rights argument (Universal Declaration of Human Rights, UHDR):
“Everyone has the right to a standard of living adequate for the health and well- being
