ECX 9700 Introduction to Health Economics*

Synopsis: This unit provides an understanding of the microeconomic approach to resource allocation, both in general and specifically in relation to the health sector. It introduces students to the use of economic tools in the analysis of the 'market' for health care, both in terms of efficiency and equity. It also provides an analytical framework for assessment of the Australian health care system from an economic perspective.

Assessment: Two assignments (each 2000 words): 50% + Examination (3 hours): 50%

* One full day seminar is provided for this subject

1. Health, Economics and Health Economics
   • health and health care from the viewpoint of economics;
   • the basic "economic problem";
   • the importance of choice and scarcity in economics; and
   • the scope of health economics.
   
   
2. An Introduction to Some Basic Economic Concepts
   • opportunity cost;
   • the production possibilities frontier and its importance as an economic tool;
   • concept of efficiency; technical and allocative efficiency; and
   • the importance of marginal changes in achieving an efficient outcome.
   
   
3. The Competitive Market Model
   • demand, demand curve, and factors influencing demand;
   • supply, supply curve, and factors influencing supply;
   • conditions necessary for perfect competition.
   
   
4. Consumer Demand and Utility
   • price elasticity of demand, and factors affecting it;
   • income elasticity of demand;
   • the concepts of utility; the law of diminishing marginal utility; and indifference curves and budget constraints.
   
   
5. Factors influencing Supply
   • resource inputs and service outputs, and influences on total outputs;
   • inputs, intermediate products, outputs and outcomes;
   • categories of costs; and the relationship between average cost and marginal cost.
   
   
6. Characteristics of Health Care
   • perfect competition; the health care market;
   • information asymmetry between consumers and providers; and institutional responses to information asymmetry; and
   • 'pure public good'
   
   
7. Consumers in the Health Care System
   • policy responses to asymmetry of information ;
   • wants, needs and demand for health services;
   • user charges available in health care, and their impact on the utilisation of health care services; and the equity implications of user charges.
   
   
8. Providers
   • medical services in Australia, and the incentives underlying the remuneration in their provision
   • changes over time in the provision of hospital services; the classification of hospital output; and incentives underlying different hospital payment systems.
   
   
9. Funders
   • Insurance markets, the problems impacting on competition in insurance markets; and the ways in which governments have intervened in private insurance markets.
   
   
10. Equity and Ethics in Resource Allocation
    
    
11. The Australian Health Care System
    • the role of government in the regulation, financing and provision of health services;
    • financial relationships between the Commonwealth and the states;
    • Australia's health care system compares to that of other similar countries;
    • overlapping functions between Commonwealth and state governments; and
    • the mix of public and private funding and provision of health services in Australia.
    
    
12. Health Expenditure Trends
    • adjusting health care expenditure data for inflation and population growth; reporting health care expenditure as a proportion of GDP; current and constant prices;
    • factors contributing to the growth of per capita health expenditure; and
    • international comparisons of health expenditure trends.