Health Economics

Business, Legal & Accounting Glossary

Definition: Health Economics




Full Definition of Health Economics


Health economics is a type of economics that deals with issues relating to the apportioning of health and health care. It is differentiated from other branches of economics by factors like asymmetric information, intervention by the government, non-compliant uncertainty, and other externalities. The uncertainty factor is part of health care including financial concerns and patient outcomes.

Health Care Supply

Supply of health care is subject to micro-economic evaluation at the individual treatment level. Parameters of evaluation take the form of comparison of different alternative courses of treatment in view of consequences and costs. Consequences themselves are measured by four methods: cost-benefit analysis, cost-utility analysis, cost-minimization analysis, and cost-effectiveness analysis.

Demand For Health Care

Health care demand is a derived demand for the need to stay healthy. Individuals tend to apportion economic resources to both create and deplete health. Health care is both an investment good and a consumption good. Effective care results in fewer sick leaves, higher salaries, and greater productivity.

Health care enables its consumers to attain a bigger bank of ‘health capital’. This capital is also subject to the fundamental economic principles of supply and demand. It is a tangible finite resource. Universal health care will increase the demand for it. A prime example of such health care demand is the long waiting list in a public health care system.

Markets Of Health Care

There are five markets of health care: services market for health care professionals like physicians and nurses, input factors market, healthcare financing market, professional education market, and the institutional services market.

Medical Economics

Medical economics concerns the cost-effectiveness of different medical treatments and pharmaceutical products. It frequently requires mathematical modelling to extract quality data from epidemiology and biostatistics to enable correct decision making. This modelling is applicable to both individual patients and also for more extensive health policy.


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Definition Sources


Definitions for Health Economics are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th March, 2020 | 10 Views.