What Is Health Economics?
Health economics is an international science that emerged in the late 1960s and 70s. Overall, health economics can be defined as:
The study of how people and organisations choose to use scarce resources and its health-related consequences.
Originally, health economics was a theoretical discipline that originated from economic welfare theory, though health economics has always taken a more practical approach to delivering input to political and managerial prioritisation and decision-making. It has become increasingly important with the development of new costly treatment methods and increasing financial challenges in the health sector.
Health Economic Assessment
The main perspective of a health economic assessment is to contribute to prioritisation decisions by rendering it clear how society gets the most health for its money.
This is done using analytical tools that compare the health-related benefits and the economic costs of various forms of treatment. It often involves a comparison of new and existing treatment forms.
- Cost-effectiveness analyses calculate the price of achieving a clinically relevant effect, such as fewer deaths following a specific type of surgery, increased mobility, less pain, lower blood pressure. This makes it possible compare a treatment with other types of treatment within the same area.
- Cost-utility analyses use a more ordinary measure of the health-related benefits of a treatment, making it possible, in principle, to perform comparisons across areas of treatment. In this connection, analyses use the concept of quality-adjusted life years (QALY), which compares a person’s state of health with the expected number of life years. Changes to the state of health are usually measured using standardised questionnaires, often as a supplement to clinical trials.
- Cost-benefit analyses translate treatment-related benefits into economic terms. This makes it possible to see whether the benefits exceed the costs and, in principle, to compare investments across social sectors. Due to methodical and fundamental challenges, the healthcare system rarely uses this type of analysis.
Broader Analysis of Health and Health Systems
This type of health economic analysis addresses a wide range of issues, where economic theory and method are used to gain insight into various health-related topics.
This could be studies of the costs and effect of health-political reforms, analyses of market-oriented solutions within the health area, causes of inequality within health and the consequences hereof. It could also be analyses seeking to determine which diseases are the costliest to treat, also called cost of illness studies.
Another important field of research concerns health-related behaviour and the use of financial and non-financial incentives to achieve certain behavioural changes, also referred to as behavioural economics.