Question

examine the importance and relevance of health economics and how it relates to an individual’s health

Answer 1

In the United States economists primary focus is the market. Not only is there a demand for desire to feel well, but also it is seen as a way to invest in human capital. There are a lot of factors that affect the demand for healthcare and medical care. Socioeconomics of the population, patient demographics, if there are any barriers, and the role of the providers. Things that affect the supply are production theory, input markets, and industrial organization. Cost of production, input substitution, and the nature and role of incentives. Supply and demand go hand in hand and intersect with one another to create market equilibrium. As individuals and a society healthcare is important in promoting good health and prevention of illnesses and disease. Economics is based on theory, but not theory alone. It is also designed to understand the behavior of patients, doctors, and hospitals. Health economics has become a highly specialized field, including areas such as epidemiology, statistics, psychology, sociology, operations research, and mathematics. Economics requires us to organize our thinking about problems we face in our daily lives. It is useful in making sense out of complex economic and social issues. Economics explains how scarce resources are distributed among competing alternative uses to satisfy unlimited human wants. If a resource is used in one area it cannot be used in another area. Example would be if a resource is applied to the health economy it cannot also be applied to housing and education. The idea of health economy is to evaluate the benefits versus the cost of each alternative and distributing the resources so that the net benefits are maximized compared to the population being considered. According to Dewar 2009, decision makers are motivated by incentives. Decision makers also make decisions based on self-interest. People use resources to increase their own economic well – being and when confronted with an alternative people often choose what is going to be better off for them. Scarcity it the reason for health economics. Rationing (the controlled distribution of scarce goods or services) is unavoidable because there are not enough resources available to meet everyone’s needs, so then people are choosing between competing objectives. People choose by use benefit versus cost and what will benefit them the most based on the cost they have to pay for it.