Economic aspects of healthcare
Healthcare systems
Conflicting goals of healthcare
- Provide quality of care to increase healthy life expectancy.
- Financial sustainability
o If we still want to offer good quality to everyone, we have to
make sure that the money we spend is well spent. We don’t
want to waste money that could be used on quality healthcare.
- Solidarity and access
o Two people with the same problem/need deserve the same
possibility to access good care.
we want to improve quality of care, but sometimes medication can be
so expensive that financial sustainability is threatened, and if we increase
personal payments for these medications then solidarity and access will
suffer.
Investing in health = investing in the economy
- Yes, healthcare costs money, but health is an investment not a cost.
Economic reality
- Needs are infinite, but budgets are limited.
o Above statement has become more apparent with the
financial-economic crisis and the COVID crisis.
- GDP belgië: 400 miljard+
- Approx. 10% of GDP is spent on healthcare (avg. EU)
- With covid there was a sudden increase
- Expenditure is expected to keep growing because of an aging
population and complex health issues.
,Recommended approach
- To optimize the health of the population within the limits of the
available resources and within an ethical framework built on equity
and solidarity principles.
o Equity people with higher needs will be tended to more than
people with lower healthcare needs, to create equality.
What do health economists do?
- Health economic evaluations
- Burden of illness
o Eg. How many billions does diabetes cost our society?
o Eg. How many lives are lost due to diabetes? How many can
we save by investing in healthcare?
- Healthcare reform
The current challenges of most healthcare systems (!) (FOUTU)
- Fragmentation of care
o Healthcare professionals work too independently from each
other.
o Eg. GP refers a patient to a specialist, but specialist does not
update GP on the progress with the patient.
o Leads to waste, less quality of care
- Overuse/misuse/abuse
o Overuse: chronic heart disease pt sees cardiologist 2x/year,
when pt sees cardiologist 4x times a year = overuse
o Misuse: pt needs clinical evaluation but gets an RX scan
instead, pt did not need imaging. It was done anyway.
o Abuse: cheating the system, some nurses charging patient
weekend visits while they had not seen the pt during the
weekend.
o Leads to waste of money, less quality of care
- Unprecedented demographics
o More elderly, more people with multimorbidities, etc.
o Threat to the budget
- Technology push
o Health technology like medicines, new advancements
(catheters, stents). New technology will often cost more than
current available resources. This puts pressure on the
healthcare budget.
o Threat to the budget
- Unequal access to care
, o People with more money have better access care than those
who don’t.
o Lack of solidarity and therefore a threat to the budget
- Quality of life of health providers (additional!)
Typical characteristics of the health care system
- Uncertainty
o What will happen tomorrow with our health?
Need for health insurance, or national health service
to protect us against financial loss in case of health
problems.
- Asymmetric information
o Supplier (HCP) knows much more about health than the
demander (patient)
o Possibility of supplier induced demand.
o Risk of overuse of unnecessary healthcare
- Externalities
o We are not only concerned with our own health but also with
the health of others
Paternalistic: “you need to lose weight” (not because you
care for someone, but because you want to exercise
your power over them)
Altruistic: you care about other people
Egoistic: I want you to care for your health, otherwise
you’ll make me sick
o Societal values also count
What can policy makers do?
1. Choose the right healthcare system
Healthcare systems
Conflicting goals of healthcare
- Provide quality of care to increase healthy life expectancy.
- Financial sustainability
o If we still want to offer good quality to everyone, we have to
make sure that the money we spend is well spent. We don’t
want to waste money that could be used on quality healthcare.
- Solidarity and access
o Two people with the same problem/need deserve the same
possibility to access good care.
we want to improve quality of care, but sometimes medication can be
so expensive that financial sustainability is threatened, and if we increase
personal payments for these medications then solidarity and access will
suffer.
Investing in health = investing in the economy
- Yes, healthcare costs money, but health is an investment not a cost.
Economic reality
- Needs are infinite, but budgets are limited.
o Above statement has become more apparent with the
financial-economic crisis and the COVID crisis.
- GDP belgië: 400 miljard+
- Approx. 10% of GDP is spent on healthcare (avg. EU)
- With covid there was a sudden increase
- Expenditure is expected to keep growing because of an aging
population and complex health issues.
,Recommended approach
- To optimize the health of the population within the limits of the
available resources and within an ethical framework built on equity
and solidarity principles.
o Equity people with higher needs will be tended to more than
people with lower healthcare needs, to create equality.
What do health economists do?
- Health economic evaluations
- Burden of illness
o Eg. How many billions does diabetes cost our society?
o Eg. How many lives are lost due to diabetes? How many can
we save by investing in healthcare?
- Healthcare reform
The current challenges of most healthcare systems (!) (FOUTU)
- Fragmentation of care
o Healthcare professionals work too independently from each
other.
o Eg. GP refers a patient to a specialist, but specialist does not
update GP on the progress with the patient.
o Leads to waste, less quality of care
- Overuse/misuse/abuse
o Overuse: chronic heart disease pt sees cardiologist 2x/year,
when pt sees cardiologist 4x times a year = overuse
o Misuse: pt needs clinical evaluation but gets an RX scan
instead, pt did not need imaging. It was done anyway.
o Abuse: cheating the system, some nurses charging patient
weekend visits while they had not seen the pt during the
weekend.
o Leads to waste of money, less quality of care
- Unprecedented demographics
o More elderly, more people with multimorbidities, etc.
o Threat to the budget
- Technology push
o Health technology like medicines, new advancements
(catheters, stents). New technology will often cost more than
current available resources. This puts pressure on the
healthcare budget.
o Threat to the budget
- Unequal access to care
, o People with more money have better access care than those
who don’t.
o Lack of solidarity and therefore a threat to the budget
- Quality of life of health providers (additional!)
Typical characteristics of the health care system
- Uncertainty
o What will happen tomorrow with our health?
Need for health insurance, or national health service
to protect us against financial loss in case of health
problems.
- Asymmetric information
o Supplier (HCP) knows much more about health than the
demander (patient)
o Possibility of supplier induced demand.
o Risk of overuse of unnecessary healthcare
- Externalities
o We are not only concerned with our own health but also with
the health of others
Paternalistic: “you need to lose weight” (not because you
care for someone, but because you want to exercise
your power over them)
Altruistic: you care about other people
Egoistic: I want you to care for your health, otherwise
you’ll make me sick
o Societal values also count
What can policy makers do?
1. Choose the right healthcare system
