Health Economics

Very few people have heard of health economics, but it is a very important discipline to the state of this nation’s healthcare system. Health economics is essentially the study of healthcare and healthcare-related resources and their allocation amongst the people of a society. It also studies the continual function of the healthcare system as a whole, as well as the social and private impacts of health-affecting behaviors like smoking. The five main markets studied in health economics are healthcare financing, physician services, institutional services, input factors and professional education.

The discipline of health economics is traditionally broken down into eight distinct disciplines: What influences health, what is health and its value, the demand for healthcare, the supply of healthcare, micro-economics evaluation at the treatment level, market equilibrium, evaluation of the whole system, and planning, budgeting and monitoring mechanisms. The demand for healthcare, that fuels this discipline, is a demand by people to consume and produce health through allocated funds and resources. Generally speaking, health economics takes a costing look at healthcare, its improvements and its outcomes. For example, do improvements in a specific sector of care provide ample improvements in health at a cost that is sustainable? Essentially, health economists hope to get the most bang for their buck. Some research in this field can include new technologies, the study of appropriate prices, anti-trust policy, optimal public and private investment and strategic behavior.

The discipline of health economics was believed to have been launched by economist Kenneth Arrow. Arrow, a Nobel Memorial Prize recipient in Economics, published an article roughly forty years ago entitled "Uncertainty and the Welfare Economics of Medical Care" in the American Economic Review. In the article, Arrow looks at to what extent market and non-market institutions play roles in the allocation of healthcare. This article forever changed the way people view economics as it relates to the medical profession.

Obviously, this complex discipline is not for everyone, and if you are a student of economics or health, there are few graduate or bachelor degree programs available in health economics. But should you like to study this discipline, health economics concentrations are available in most economics, public health and health policy programs. Health economists play an increasingly important role in the monitoring, reform, creation and study of healthcare in this country. And as President Obama continues to reform the current state of American healthcare, health economist will be continually relied upon for direction and guidance through the debates.

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