Health Insurance Economics

Scope[edit]

The health economy is an economic sector that deals with questions of efficacy, value and behaviour in the manufacture and use of health and health care.... Health economics experts are largely studying the operation of health care and health-related behaviours such as tobacco. Kenneth Arrow's groundbreaking 1963 paper, often seen as an occasion for health economics as a science, made differences between health and other goods.

Distinguishing health economics from other areas are the large scale public interventions, persistent multidimensional insecurity, imbalanced information, entrance gates, externality and the existence of a third part. In health care, the third-party provider is the doctor who makes purchase choices (e.g. whether to order a laboratory test, prescription, operation, etc.) and is isolated from the cost of the products or services.

White-collar health professionals assess different kinds of information: cost, fees and expenses. Insecurity is an essential part of health, both in terms of patients' outcome and in terms of financing problems. Alan Williams' "Sanitation Diagram"[7], which divides the disciplinary field into eight different subject areas, properly summarizes the extent of health economics: Which is health and what is its value?

Health care supply needs are a derivative of health care needs. Health care is called for as a means for the consumer to increase the amount of "health capital". "Health demands are different from most other goods because the individual provides a resource to eat and make health.

Above describes three different personalities in health economics. According to the World Health Report (p. 52), human beings play four different health care roles: Grossman's 1972 health production model[8] was highly authoritative in this area of research and has several singular features that make it remarkable.

Grossman's approach regards each and every one of them as both producers and users of health. The health is considered as a population that deteriorates over the course of the years without "investment" in health, so that health is seen as a kind of asset. It recognises that health is both a commodity that brings immediate happiness and benefits, and an asset that brings indirect happiness to individuals through fewer illness periods.

Investing in health is expensive because users have to exchange health related times and ressources, such as training in a nearby fitness studio, for other health objectives. Those determinants are used to identify the optimum health levels an individual needs. It predicts the impact of price changes on health and other goods, labor markets performance such as jobs and salaries, and technology changes.

This prediction and other forecasts from Grossman's 1972 papers complement the forecasts of health care economics and provide the foundation for much of their research. The Grossman hypothesis is that the optimum health investments are made when the health capital's incremental costs correspond to the incremental benefits. The interest rates with which the consumers are confronted are designated as r. The incremental costs of health care assets can be determined by the addition of these variables:

Health capital's minimal utility is the yield on this health care asset, both in the markets and non-markets. Within this paradigm, optimum health status can be influenced by determinants such as old age, wage levels and training. For example, ?{\displaystyle \delta \, } rises with increasing old age so that it becomes more and more expensive to reach the same levels of health funds or health stocks as an aging.

Old-age also reduces the borderline benefits of health stocks. Therefore, the optimum health supply will decline with increasing old age. In addition to the questions of the basic,'real' need for health services, which arises from the wish for good health (and thus is affected by the health manufacturing function), the important differentiation is between the'marginal utility' of health services (which is always linked to this'real demand' graph, which is always linked to the deduced demand) and a distinct'effective demand' graph, which summarises the level of health services sought at certain specific markets price.

Since most health services are not directly sourced from suppliers, but are sourced at subsidised rates on the basis of insurance, the cost to customers is usually much lower than the prevailing retail cost. In this way, the "effective demand" will have a distinct relation between cost and volume, such as the "marginal utility curve" or the actual ratio of demands.

These distinctions are often described under the heading "ex-post morality hazard" (which in turn differs from ex-ante morality hazard found in all types of insurance markets). Evaluating the economy, in particular cost-benefit analyses, has become a basic part of technological assessment procedures for agency work in a number of different states.

For example, the Institute for Quality and Efficiency in Health Care (IQWiG) in Germany and the National Institute for Health and Care Excellence (NICE) in the United Kingdom consider the cost-effectiveness of new drugs. There are five healthcare sectors that are usually analysed:

Even though the hypotheses about market literature model textbooks for health market economies are quite good, there are significant variations. In many countries, there have been established pooling of risks in which relatively sound applicants subsidize the provision of the other part. Insurance companies must deal with a negative choice that arises when they are not able to fully forecast the applicants' health costs; a negative choice can damage the fund.

Characteristics of insurance markets risks pool, such as group buying, preference selecting ("cherry picking") and already existing term exclusion, are intended to manage negative sourcing. Of course, policyholders are less worried about health expenses than if they were to pay the full cost of nursing it. Ethical risks are the result, and the RAND Health Insurance Experiment shows that cost is rising.

Insurance companies use several technologies to contain the expense of morale hazard, among them the imposition of co-payments on individuals and the limitation of incentive for doctors to deliver expensive nursing treatment. Insurance companies often rival each other through the selection of benefits they deliver, demands on reimbursement and restrictions on doctors. Health market users often experience a shortage of sufficient information about which products to buy and which suppliers are offering the best value for money.

White-collar health care professionals have identified a difficulty with provider-induced demands where suppliers orient patient care advice towards commercial rather than clinical outcomes. Frequently used as a synonym for health economics, i. e. medicinal economics, according to Culyer[10] the sector that deals with the appliance of economics is the sector that deals with applying economics to phenomenon and issues typical of the second and third health markets described above.

However, it is usually about the cost-benefit analyses of drugs and the cost-effectiveness of different types of treatment. Medicinal economics often uses numerical modelling to synthesize biostatistical and epidemiological information to assist health decision-making, both for the individual and for general health outcomes. Phelps, Charles E. (2003), Health Economics (3rd ed.), Boston :

"The New Palatine Count." An economic dictionary, v. 2, p. 614-19. "Economics, Values, and Health Care Reform", American Economic Review, 86(1), S. 1-24 Archiviert am 14. Juli 2007 am Wayback Machine. Health, Economy and Social Choice, extended issue. "He' health economics. "The New Palgrave Dictionary of Economics", 2. Auflage.

"Consumer awareness of healthcare costs: a reflections on behavioral economics in an emergent economy". "Childhood mental health and human capital." A business perspective ed. Introductory chapter on health economics: Handbook of Health Economics, Elsevier. Health Economics Handbook, 1B. Public health economics. The Journal of Health Economics Aims & Objectives and Back Issues and Abbreviations section.