Introduction to health economics

Health care services are very important for the growth and development of the country. Modern health services, provide enjoyment of healthy life which are available only for a section of people. Also a substantial proportion of the world’s population has poor health as well as high mortality and morbidity levels. Invariably poor health people are very poor. This tells that there is link between health & economic development.

What is economics?Economics is the study of how people choose to use their resources to produce, exchange and consume goods and services.

1. Definition by Paul A. Samuelson: It is the study of how men & society choose, with or without the use of money, to employ scarce productive resources to produce various commodities over time and distribute them for consumption, now and in future, among various people and groups in societyResources- includes land; labour and capital.

Land refers to the permanent fixed supplyLabour – refers to human talents in production

Capital – means the resources produced by economic system.

Scarcity: - This is the inability of economy to meet the unlimited wants of the society or individual orinsufficient amount of resources

Production: - Any economic activity which is directed to the satisfaction of wants of people

Exchange:- When production is insufficient for consumption the goods & services are exchanged

Health & economics:

We are conscious about that health affects our economy of individual, society and country. Financial limitations restrict the procurement of adequate medical care.

There are people engaged in demand and supply of health. That is doctors, patients, nurses, hospitals pharmaceutical companies etc. Health economics studies these people and institutions. So health economics cannot exist independent of economics. Health economics quantify the resources used in health care delivery system.

So the main focus: of health economics is on

1. How best the limited resources be used on preventive, curative & rehabilitative services to maximizehealth status of a society?

2. What should be the allocation of financial, physical & human resources between different activitieswithin a hospital or institutional setting?

3. How to realize health care sector efficiency?

Relation Between Health and Economics

The health of a state depends on the economy of the place. Similarly, the economy depends on the heath status of the people in the state. The reason is that each of these are dependant on the other. There are various reasons for this.If the people of a particular place are not healthy, then the country has to spend a lot of money for the health care of the population. On the other hand, if the individual is healthy, then all the money is saved for the country. This is the reason for the health and the economy of the country being dependant on each other.