Healthcare economics and financing
College 1
Marginale utility is het hoogste waar de lijn het stijlste is
Marginal product = the change in output per unit change in input
MP = the slope of the total product curve
- Gemiddelde Q / Gemiddelde L (health)
,Opportunity cost = the benefits that are lost/forsaken when choosing another option
Effectiveness: wherter or not health care ‘’works’’ (doeltreffend)
Efficiency: allocation of scarce resources that maximized the achievement of aims (doelmatig)
Ecuity: fairness in the distribution and finance of health and healthcare between people
(rechtvaardig)
,College 2
The ultimate aim of health care consumption according to a welfare economist is increasing utility
What is demand?
- Demand for a good is the quality of the good that consumers are willing and able to buy
- Useful to: predict reactions and have an idea about the values of service to people
- Demand curve → how much consumers are willing and able to buy at different prices
- Law of demand: the higher the price the lower the quantity demanded
Consumer theory
- Consumer goods provide utility
- Individual preferences determine what will give utility
U = U(X1, X2, …, Xn)
- Consumers make choices about what to consume in order to maximize utility, given their
available resources
- Hence, theory of demand is built of 2 stages
- Preferences
- Budget constraint
, Substitutes = vervangbare goederen; zwarte en blauwe broek
Complementary = aanvullende goederen; left and right shoes or naald en spuit
Utility maximizing point = Px / Py
Factors that influence demand for healthcare
- Tastes and preferences
- Income
- State of health
- Time costs
- Quality of care
- Advice from providers
- Insurance coverage
- Education
- Prices of substitutes and complements
Supplier-induced demand: doctor is the agent of the patients
People invest in health, because it gives them utility and it gives them investment (a sick person cant
work)
Grossman’s model:
Health had value in 2 ways
1. Consumption value
Health yields direct benefits (you feel better)
2. Investment effect
Health increases the time available to be productive with wage/non-wage activities
College 1
Marginale utility is het hoogste waar de lijn het stijlste is
Marginal product = the change in output per unit change in input
MP = the slope of the total product curve
- Gemiddelde Q / Gemiddelde L (health)
,Opportunity cost = the benefits that are lost/forsaken when choosing another option
Effectiveness: wherter or not health care ‘’works’’ (doeltreffend)
Efficiency: allocation of scarce resources that maximized the achievement of aims (doelmatig)
Ecuity: fairness in the distribution and finance of health and healthcare between people
(rechtvaardig)
,College 2
The ultimate aim of health care consumption according to a welfare economist is increasing utility
What is demand?
- Demand for a good is the quality of the good that consumers are willing and able to buy
- Useful to: predict reactions and have an idea about the values of service to people
- Demand curve → how much consumers are willing and able to buy at different prices
- Law of demand: the higher the price the lower the quantity demanded
Consumer theory
- Consumer goods provide utility
- Individual preferences determine what will give utility
U = U(X1, X2, …, Xn)
- Consumers make choices about what to consume in order to maximize utility, given their
available resources
- Hence, theory of demand is built of 2 stages
- Preferences
- Budget constraint
, Substitutes = vervangbare goederen; zwarte en blauwe broek
Complementary = aanvullende goederen; left and right shoes or naald en spuit
Utility maximizing point = Px / Py
Factors that influence demand for healthcare
- Tastes and preferences
- Income
- State of health
- Time costs
- Quality of care
- Advice from providers
- Insurance coverage
- Education
- Prices of substitutes and complements
Supplier-induced demand: doctor is the agent of the patients
People invest in health, because it gives them utility and it gives them investment (a sick person cant
work)
Grossman’s model:
Health had value in 2 ways
1. Consumption value
Health yields direct benefits (you feel better)
2. Investment effect
Health increases the time available to be productive with wage/non-wage activities
