CHAPTER 1 WHY HEALTH ECONOMICS?
CHAPTER 1 WHY HEALTH ECONOMICS?
Why is health economics interesting? The U.S. health care economy is massive and expensive. Health is a major source of uncertainty and risk. Governments around the world are deeply involved in financing health systems. Bhattacharya, Hyde and Tu-Health Economics
Bhattacharya, Hyde and Tu – Health Economics Why is health economics interesting? The U.S. health care economy is massive and expensive. Health is a major source of uncertainty and risk. Governments around the world are deeply involved in financing health systems
The U.S.health care economy is massive and expensive The U.S.GDP in 2008 was approximately $14 trillion. One out of every six dollars spent in the U.S.that year was spent on health care. In 1960,barely one dollar out of every twenty spent in the U.S.went toward health care. The trend has been similar in countries around the world,but no country spends quite as much on health care as the U.S. What do we get for all this money? Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics The U.S. health care economy is massive and expensive The U.S. GDP in 2008 was approximately $14 trillion. One out of every six dollars spent in the U.S. that year was spent on health care. In 1960, barely one dollar out of every twenty spent in the U.S. went toward health care. The trend has been similar in countries around the world, but no country spends quite as much on health care as the U.S. What do we get for all this money?
Health care expenditures in the US 16 14.000 15 13.000 12.000 11.000 43210 10.000 9000 8000 7000 uollq) 6000 5000 8 4000 3000 2000 6 1000 5 0 1960196419681972197619801984198819921996200020042008 Year Health expenditure as%GDPGDP (billion $ Figure 1.1.Health care expenditure as a proportion ofUS GDB 1960-present Source:Data from the US Center for Medicare and Medicaid Services,Office of the Actuary. Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Health care expenditures in the US
Health is uncertain and contagious The health economy may be huge,but how is it different from other,smaller markets like the market for bananas and the market for televisions? Two interesting economic properties Uncertainty:most people can predict how many bananas or TVs they will buy in the next week,but not how many emergency heart surgeries they will need in the next week. Contagiousness:it doesn't matter to you if your neighbor buys a banana or a TV,but it does matter if he skips his flu shot. Bhattacharya,Hyde and Tu-HealthEconomics
Bhattacharya, Hyde and Tu – Health Economics Health is uncertain and contagious The health economy may be huge, but how is it different from other, smaller markets like the market for bananas and the market for televisions? Two interesting economic properties Uncertainty: most people can predict how many bananas or TVs they will buy in the next week, but not how many emergency heart surgeries they will need in the next week. Contagiousness: it doesn’t matter to you if your neighbor buys a banana or a TV, but it does matter if he skips his flu shot