Module: Health systems, economics and policy

Topic 4


Topic 4: Economics and Health Policy - The Social Welfare Approach to Health Systems

Objectives/learning outcomes

 

Students will be able to:

Recognise and understand basic economic concepts – efficiency, social welfare and utility; opportunity cost, competition and moral hazard.

Critically examine economic analysis from the perspective of health policy.

 

Seminar: Is orthodox economics pro-market?

THESE SEMINARS WILL BE HELD ON 22 AND 23 OCTOBER

A class discussion of a recent article by Alan Brett, “American Values” – A Smoke Screen in the Debate on Health Care Reform (N Engl J Med 2009;361: 440-1). Discussion will be led by the following: Group 1 - Ahmed, Filiz, Obianuju; Group 2 - Yasin, Nicole, Joseph; Group 3 - Anam, Eric, Marina.

Come prepared to discuss the following questions:

  • What role does ‘choice’ play in the US health care reform debate?
  • What according to Brett is the connection between ‘choice’ and markets?
  • How does Brett rebut the choice argument?
  • What alternative approach does he suggest?

 THE BRETT PAPER IS AVAILABLE HERE.

Set Reading

 

Essential reading will now consist of the lecture notes and the paper by Brett. I have left other reading recommendations in the lecture notes for those who want to explore the topic in more detail.

 

Lecture summary for the economic perspective

 

Economic analysis has played an important role in addressing policy questions about the relative roles of public and private sectors and the cost efficiency of health systems.

In this lecture we review what economists mean by ‘efficiency’ and market competition. The limitations of this perspective are explored.

 

The “health and wealth” approach (lecture 2) is an example of an economic or social welfare analysis because it is concerned with balancing the costs and benefits to society of universal health coverage. Social welfare analysis is a branch of health economics. It attempts to identify which allocation of resources will lead to the greatest welfare or “utility” in society. That allocation is said to be the most “efficient”.

 

Efficiency is a fundamental concept in economics. It has two technical senses. When welfare or normative economists talk about an improved (or more ‘efficient’) state of affairs they are referring to a state in which there is a higher level of utility (allocative efficiency) or one in which there is higher productivity (technical efficiency). Economic analysis has played an important role in answering policy questions about the relative roles of public and private sectors and subsidiary questions such as the appropriate reward structures for medical professionals, the efficiency of insurance markets, how to contain costs, and the role of markets in resource allocation. The choice agenda, market competition and privatisation all have economic rationales. These policies are briefly examined and we ask whether the frame of reference means that economics is pro-market. 

Lecture Notes and Powerpoints  HERE and HERE