Health Economics
Hoorcollege 1 - Health policy and health financing (Ch.1 & Ch.15.1,2) 2
Hoorcollege 2 - Health systems, risk and insurance (Ch.15.3-7) 10
Hoorcollege 3 - Demand for health care (Ch.2&7) 18
Hoorcollege 4 part 1- Adverse Selection: Akerlof’s market for lemons (Ch.8) 27
Hoorcollege 4 part 2 - Moral Hazard (Ch.11) 34
Hoorcollege 5 - Demand for health: The grossman model (Ch.3) 37
Hoorcollege 6 - Socioeconomic disparities in health (Ch.4) 45
Hoorcollege 7 - Preventive health behaviour and infectious diseases 54
Hoorcollege 8 - HIV/Aids and economic epidemiology 64
Hoorcollege 9: Causality and socio-economic disparities in health 65
Hoorcollege 10 - Unhealthy behaviour: smoking, alcohol and obesity. 73
Hoorcollege 11 - Non-Communicable diseases (NCD) 82
Hoorcollege 12 - Mental health and depression 91
,Hoorcollege 1 - Health policy and health financing
(Ch.1 & Ch.15.1,2)
Why is health economics interesting?
- Market voor health care is massive and expensive
- Health is a major source of uncertainty and risk, and can be highly contagious (other
people's decisions affect your health as well)
- Governments around the world are deeply involved in finance health systems
Universal health coverage (UHC)
UHC means that all people can use the health services they need of sufficient quality to be
effective, while also ensuring that the use of these services does not expose the user to
financial hardship.
- Equity in access to health services
- Quality of health services
- Protection against financial risk
You want people to pre-pay and risk-pooling .You pay before you
get sick. Risk pooling in health insurance is the fundamental
concept of combining the financial risks of a large group of people
to share the costs of healthcare. Individuals contribute to a central
fund, and these funds are then used to pay for the medical
expenses of those who need care, regardless of their individual
health status.
Health in a global context:
Health outcomes has been improving over the time across the world:
- Mortality rates decrease
- Life expectancy at birth increase
But differences in health outcomes remain substantial across countries. Mortality is 100x
larger in low-income countries compared to high-income countries. Also within countries,
children’s likelihood to die is relates to wealth
This could be caused due to:
● Geographical reasons (people with money can move/travel for care)
● More money to spend on treatments
● Access to check-ups
● Lifestyle (high educated live more healthy)
,Measuring the burden of disease
DALY’s - the lost years in health because of disease.
- Years lost due to mortality + years lost due mobility
DALY calculations:
- Measure how many people die or become disabled by this disease in a given year
- Look at ages of those who died and estimate years of life lost
- Look at ages of the disabled and estimate years of disability
- Use expert judgments of how much of a year is lost to a disability
- Discount the future at 3 percent
- Add death and disability parts together to get DALYs lost to the disease
Strengths of using DALYs:
+ Allows for comparisons across countries and over time
+ Includes both death and loss of function in its measure of harm
+ Sees greater harm in diseases that strike earlier, causing more years of loss
Weakness of using DALYs:
- Many arbitrary choices
- Does not account for non-tangible burdens such as stigma
- Does not account for financial impacts on families (which, e.g., might be much
greater for main breadwinners)
QALY - the years gained due to the health care you can reserve
One QALY gained equates to one year in perfect health gained due to a medical technology.
DALYs measure the years of healthy life lost due to mortality and
morbidity
QALYs measure the years of healthy life gained due to a health
intervention
Health spending:
The more a person spends on health → the higher the life expectancy is
- Lesotho, Swaziland, South Africa is controversial; people pay more but life
expectancy goes down due to HIV in that period of time (1995-2014)
, The minimum spending per person per year is $86, 46 countries spend less than $50 per
person per year.
Out of pocket expenditure: in healthcare, an "out-of-pocket" payment is the portion of your
medical costs that you pay directly with your own money, rather than having your insurance
plan cover it.
Risk pooling vs OOPs (out of pocket spending)
- Households may finance their health care by using free public care or making
insurance claims – this requires pre-payment (of taxes or insurance premiums) and
allows for risk-pooling
→ Alternatively, they pay out-of-pocket using their income, savings, borrowing money, selling
assets, etc.
- For many households in low- and middle-income countries (and the US), health
insurance is unavailable or unaffordable – e.g. African health systems are
predominantly based on out-of-pocket spending (OOPs) instead of pre- payment and
risk-pooling
→ It has been estimated that each year, about 100 million people fall into poverty due to
(uninsured) ill health (World Bank-WHO, 2017)
The alternative is to forego health care all together
Government spending in health interventions
Policymakers might try to intervene (ingrijpen) at different stages of the formation of health:
Health environment - green areas, stimulating sports
Health inputs and behaviours - sign on food
Health care services (access and quality) -
Health care financing - taxes
Through various means:
1. Regulations (e.g. air pollution, quality standards)
2. Information provision (e.g. on healthy food, “Schijf van Vijf”)
3. Public health programs (e.g. immunization campaigns)
4. Production (e.g. water-treatment plants, health centers)
5. Finance (e.g. social health insurance, taxing tobacco)
6. Research & development (e.g. vaccines, neglected diseases)
Hoorcollege 1 - Health policy and health financing (Ch.1 & Ch.15.1,2) 2
Hoorcollege 2 - Health systems, risk and insurance (Ch.15.3-7) 10
Hoorcollege 3 - Demand for health care (Ch.2&7) 18
Hoorcollege 4 part 1- Adverse Selection: Akerlof’s market for lemons (Ch.8) 27
Hoorcollege 4 part 2 - Moral Hazard (Ch.11) 34
Hoorcollege 5 - Demand for health: The grossman model (Ch.3) 37
Hoorcollege 6 - Socioeconomic disparities in health (Ch.4) 45
Hoorcollege 7 - Preventive health behaviour and infectious diseases 54
Hoorcollege 8 - HIV/Aids and economic epidemiology 64
Hoorcollege 9: Causality and socio-economic disparities in health 65
Hoorcollege 10 - Unhealthy behaviour: smoking, alcohol and obesity. 73
Hoorcollege 11 - Non-Communicable diseases (NCD) 82
Hoorcollege 12 - Mental health and depression 91
,Hoorcollege 1 - Health policy and health financing
(Ch.1 & Ch.15.1,2)
Why is health economics interesting?
- Market voor health care is massive and expensive
- Health is a major source of uncertainty and risk, and can be highly contagious (other
people's decisions affect your health as well)
- Governments around the world are deeply involved in finance health systems
Universal health coverage (UHC)
UHC means that all people can use the health services they need of sufficient quality to be
effective, while also ensuring that the use of these services does not expose the user to
financial hardship.
- Equity in access to health services
- Quality of health services
- Protection against financial risk
You want people to pre-pay and risk-pooling .You pay before you
get sick. Risk pooling in health insurance is the fundamental
concept of combining the financial risks of a large group of people
to share the costs of healthcare. Individuals contribute to a central
fund, and these funds are then used to pay for the medical
expenses of those who need care, regardless of their individual
health status.
Health in a global context:
Health outcomes has been improving over the time across the world:
- Mortality rates decrease
- Life expectancy at birth increase
But differences in health outcomes remain substantial across countries. Mortality is 100x
larger in low-income countries compared to high-income countries. Also within countries,
children’s likelihood to die is relates to wealth
This could be caused due to:
● Geographical reasons (people with money can move/travel for care)
● More money to spend on treatments
● Access to check-ups
● Lifestyle (high educated live more healthy)
,Measuring the burden of disease
DALY’s - the lost years in health because of disease.
- Years lost due to mortality + years lost due mobility
DALY calculations:
- Measure how many people die or become disabled by this disease in a given year
- Look at ages of those who died and estimate years of life lost
- Look at ages of the disabled and estimate years of disability
- Use expert judgments of how much of a year is lost to a disability
- Discount the future at 3 percent
- Add death and disability parts together to get DALYs lost to the disease
Strengths of using DALYs:
+ Allows for comparisons across countries and over time
+ Includes both death and loss of function in its measure of harm
+ Sees greater harm in diseases that strike earlier, causing more years of loss
Weakness of using DALYs:
- Many arbitrary choices
- Does not account for non-tangible burdens such as stigma
- Does not account for financial impacts on families (which, e.g., might be much
greater for main breadwinners)
QALY - the years gained due to the health care you can reserve
One QALY gained equates to one year in perfect health gained due to a medical technology.
DALYs measure the years of healthy life lost due to mortality and
morbidity
QALYs measure the years of healthy life gained due to a health
intervention
Health spending:
The more a person spends on health → the higher the life expectancy is
- Lesotho, Swaziland, South Africa is controversial; people pay more but life
expectancy goes down due to HIV in that period of time (1995-2014)
, The minimum spending per person per year is $86, 46 countries spend less than $50 per
person per year.
Out of pocket expenditure: in healthcare, an "out-of-pocket" payment is the portion of your
medical costs that you pay directly with your own money, rather than having your insurance
plan cover it.
Risk pooling vs OOPs (out of pocket spending)
- Households may finance their health care by using free public care or making
insurance claims – this requires pre-payment (of taxes or insurance premiums) and
allows for risk-pooling
→ Alternatively, they pay out-of-pocket using their income, savings, borrowing money, selling
assets, etc.
- For many households in low- and middle-income countries (and the US), health
insurance is unavailable or unaffordable – e.g. African health systems are
predominantly based on out-of-pocket spending (OOPs) instead of pre- payment and
risk-pooling
→ It has been estimated that each year, about 100 million people fall into poverty due to
(uninsured) ill health (World Bank-WHO, 2017)
The alternative is to forego health care all together
Government spending in health interventions
Policymakers might try to intervene (ingrijpen) at different stages of the formation of health:
Health environment - green areas, stimulating sports
Health inputs and behaviours - sign on food
Health care services (access and quality) -
Health care financing - taxes
Through various means:
1. Regulations (e.g. air pollution, quality standards)
2. Information provision (e.g. on healthy food, “Schijf van Vijf”)
3. Public health programs (e.g. immunization campaigns)
4. Production (e.g. water-treatment plants, health centers)
5. Finance (e.g. social health insurance, taxing tobacco)
6. Research & development (e.g. vaccines, neglected diseases)
