Every human being is always concerned about their health. And this is why health care accounts for the largest percentage of any economy. When a nation has healthy citizens, it's easier for them to work and grow faster than sickly. Besides, they invest in better things in life than just in healthcare systems. In the USA, the Patient Protection and Affordable Care Act of 2009 reformed the health care system completely. It is said that nearly 50 million Americans lacked health care insurance before this. And now it has become a major aspect of the ever-growing US economy. Health and healthcare costs, among them, health care insurance, have become the dominating factors for many countries' economic and political growth. Because of the influence, the healthcare sector has, and as one of the largest sectors in many economies, its share of gross domestic product (GDP) is always growing. It has become even more significant in the 20th century, where many scientific inventions have been discovered in the medical field. As such, it has become one of the defining aspects of the general developing world.
For this reason, it should not be a surprise that healthcare economics has emerged as a special subject of study within economics. This is one of the subjects that a student of economics needs to take very seriously, not only because of its role in the general development of an economy but because of its importance on the general population. In this course, we will be looking at random topics related to health and health care economics. We need to understand the different policies that make the healthcare sector useful and how it grows from economy to economy.
However, this article will dwell only on introducing you to health and healthcare economics. In other words, what is health care economics, and why should it matter to anyone. We will be discussing the scope of health care economics with the main focus on the demand and supply of specific healthcare services and why they are crucial in the global development goals. Governments use social programs and other policies to regulate and pay close attention to the medical field. Also, it's important to note that private health insurance or providers play a vital role in this industry, which leads us into a close examination of markets.
This is one of the widest subjects of study in economics. It is not easy to study everything at once or come up with specific topics as it's an ever-evolving sector. Consider that hospitalization is, in many ways, very different from a trip to the mall. Hence, issues like information, quality of care, and equity of access have to be critically examined. Handling human health is much more complicated than dealing with anything else. Even though every country has its own way of dealing with issues, there are certain rules that can be and must be applied in any region, which makes it a global subject. Different practices and potentials insights in these economies may seem to vary, but it all comes down to common policy issues that dominate the political environment.
This chapter will also find the important background information you need to know about health economics and what health economics stands for. It comes with a broad overview of the significances of this sector. In the second part, we will dwell majorly on why this subject should be studied and the policy concerns that come with it. Most importantly, the subject of health care economics seeks to promote the understanding that economics helps in the understanding of the functions of healthcare markets, while the health and healthcare sector impacts economic growth in major ways.
To understand healthcare economics, one needs to have a good understanding of economics and healthcare as separate terms. Generally, economics is all about people's stability to lead a happier life, and healthcare deals with the general well-being of individuals and the entire society. Healthcare economics is all about who healthcare economics are and what they do. Morrisey and Cawley (2008) looked at health economics and the individual who helps shape it in 2005, describing three aspects that explain stakeholders in the field.
First, they examined training, where 96% of experts held academic doctorate degrees. Nearly three-quarters of these people had their degree in economics. This means the employment sector has a crucial part to play in the growth and development of health and healthcare economics. Consider that there is a larger number of institutions across the world teaching majors in healthcare economics on a higher level of training. Secondly, according to Morrisey and Cawley, healthcare economists are found in employment, where 64% were in the university setting, 15% in non-profit organizations, and 12% in government. Again, we look at health and healthcare economics as a source of employment opportunities. Thirdly, they discovered that only about 24% of health economists held their appointments in economics departments in terms of academic units. 26% were in schools of public health, whereas 18% of this group worked in schools of medicine.,
Apart from this, Morrisey and Cawley sort to uncover information about what professionals in the health and healthcare economics field do. They found out that these experts draw from different sub-disciplines or training within economics. Such disciplines include labor economics, industrial organization, public finance, and cost-benefit analyses. Throughout the subject, you will be introduced to various research studies. Many countries, especially the US, devotes a large share of the GDP to healthcare expenditure. The USA is the largest spender in this care, exceeding any other country on the planet as it spends over $8000 on individuals. According to many economic experts, these patterns rely on the rapid adoption of new technologies in the US. Even though the country does not have a very good record in terms of broad health outcomes indicators like life expectancy and infant mortality rate, it's still among the most developed economies. Some critics have often wondered what Americans are really getting for their money as policymakers and economic experts in healthcare seek to establish whether or not it's important to spend on technologies. There are so many issues to this subject than you can imagine, especially because the industry has been expanding largely over the years.
For instance, think about a treatment involving a new surgical procedure for a patient suffering from a heart attack. We can estimate the immediate cost impact of the new procedure on the individual, but that will not be enough. Looking at the patient's expected benefits in terms of the immediate cost impact of the new procedure and the short-term survival of the patient is not easy. It is better to impact the patient's treatment for many years as this will address the issues of future spending. One expert David Cutler (2007), comes up with a framework to address these complicated interrelationships in his work "The Lifetime Costs and Benefits of Medical Technology." His work looks at the analysis of a set of surgical procedures, like coronary bypass and angioplasty, that normalizes blood flow – revascularization. These complex processes seek to offer a long-term solution to patients, helping them have a more fulfilling life. His work involves looking at patients who have had these attacks and tracking them for 17 years and more. In his conclusion, the process costs $33,000 for every extra year of life. Many experts would agree that such an expenditure is worth for the growth of an economy.
Healthcare costs generally, and the cost that touch technological discoveries are relevant to every country. This is why most countries will go to a large extends to invest in the medical and related fields. Health economics is not a very old discipline. It's still relatively new, with an evolving scope and pedagogy. As such, it, or we, can not give all the answers related to the relevance to the discipline at once. Even so, it is one of the disciplines that have more relevance to the world today than ever.
Healthcare economics' relevance comes from a broader perspective than what you could get from any other discipline. It's a very relevant subject, especially today, when people are living longer, and they can work for more years than they would several years ago, impacting the labor market. Besides, chances are it will not be long before one gets a job in a health-related field. This is a market that is versatile enough to take in experts with different economic backgrounds. The world has always been concerned with the health and development of the modern economic field. We all know that economic growth is the backbone of every society. But it will not be so if those responsible for keeping it are faced with constant sickness. And this is one of the reasons healthcare economics has become relevant today more than ever.
There is no denying that health is an important aspect of human existence, as is economic growth and success. Hence, many countries have found it necessary to invest more of their resources in the healthcare sector. Harvey Rosen, a former Chairman of the Council of Economic Advisers, delivered a speech in March 2005 to the National Association of Business Economics, in which he noted that the quality of health care has greatly improved over the past few years. Today, we are witnessing better diagnostic techniques, surgical procedures, and therapies in solving a wide range of medical issues. Treating a heart attack today is not just a 'commodity' as the same issue in the 50s. Patients can easily access processes like coronary bypass surgery and cardiac catheterization. Even though they have increased expenditure per heat patient, they have actually improved health outcomes. For instance, patients can now survive hospitalization due to heart attacks, something that was not possible back then.
Some of the improvements seen in medical techniques are not that expensive, as Rosen noted. For instance, aspirin can be prescribed to victims of heart attacks. This is not an expensive procedure, and yet it leads to a substantial improvement in their health in terms of surviving a medical procedure. However, new medical technologies are often costly. Most of the equipment needs to perform the medical procedures not to come cheaply. Consider, for instance, that a positron emotion tomography (PET) costs about $2 million each. These are crucial machines that can be used to detect changes in cells before form a tumor large enough to be handled by MRI or X-rays. As you can imagine, using such a machine means the patient will have to spend a lot more.
These are some of the factors that increase medical expenditures. Besides, you will find that these expensive machines are only found in a few places around the world. Transport costs and the costs of getting the treatment are another thing patient has to put into consideration.
We can use a technology-based theory to explain why there has been an increase in healthcare expenditures in countries like the US, the UK, Japan, and many similar economies. These countries have access to the same expensive technological innovations, which makes it easy for them to invest. Cost containment is put to light when this technology-based explanation is involved.
In conclusion, costs are rising simply because of quality improvements. Which brings us to the question of whether it's bad or not that these improvements are so? How do people view these values these increments in relation to their social cost? According to economist Dana Goldman, many people would prefer to buy modern medicine at today's price than buy 1960s medicine at a low price. As medical innovations rise, they greatly impact economic growth. Economist has always tried to establish how these innovations can be used to make things better in the world—as such, studying the economics of health and healthcare is not an opportunity to understand the industry but to help in developing new economic and medical ideas.
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