Health economic theory

About the course

In this course, theoretical concepts and models from economics are used to analyse health and health care production, demand, and financing. The course deepens the student's understanding of how health care differs from other sectors from an economic perspective. It also highlights similarities, such as how consumers'/patients' and providers' behaviour is influenced by incentives. Optimal care - in terms of the quantity, quality, cost, and distribution of care in the population - is discussed from a theoretical perspective and linked to the economic tools available to policy makers to mitigate key market failures and manage demand and supply. Topics to be discussed include: pre-payment (through taxation, private or social insurance), provider payment methods (budget, fee-for-service, capitation, pay-for-performance) and patient choice (patient-driven competition to improve quality of care). The course also introduces students to the classical Grossman model (1972) of health as human capital and empirical studies of how health and socioeconomic variables influence each other. No prior knowledge of economics is required but a limited amount of mathematical notation will be used to describe several of the models.