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Chapter II

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M Sena Nugraha P
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5 views

Chapter II

Uploaded by

M Sena Nugraha P
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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CHAPTER II

Health and Medical Care: An


Economic Perspective
(Santerre & Neun, 2004)
What is Health?
• “A state of physical mental and social well-
being and the absence of disease or other
abnormal condition” Mosby Medical
Encyclopedia (1992, p.360)
• Economists view: health as a durable good,
or type of capital, that provides services
• Health defies precise measurement. Health
measurement depends on the quantity and
quality of life
Why Good Health? Utility
Analysis
• Stock of health generates services which
yield satisfaction called utility by
economists
• Health as a good is desired for
consumption and investment purposes
• Consumption: healthy people enjoy life
more
• Investment: concerns the relation between
health and time
• Law of diminishing marginal utility exists
• MUH = ∆U/∆H
What is Medical Care?
• Medical care is composed of myriad
goods and services that maintain,
improve, or restore a person’s
physical or mental well-being
• Medical goods: prescription drugs,
wheelchairs
• Medical services: surgeries, annual
physical exams
• Units of medical care is difficult to measure
precisely because of its heterogeneous
nature
• Intangibility: medical service is incapable of
being assessed by the five senses
• Inseparability: the production and
consumption of a medical service take place
simultaneously
• Inventory: health care providers are unable to
stockpile an inventory of medical services
• Inconsistency: the composition and quality of
medical services consumed vary widely
across medical events
• The quality of medical services may also
be inconsistent
• Structural quality: reflected in the physical
and human resources of the medical care
provider (facilities, medical equipments)
• Process quality: reflects the specific
actions health care providers take on
behalf patients in delivering and following
through with care (access, data collection)
• Outcome quality: refers to the impact of
care on the patient’s health and welfare
(satisfaction, work time lost to disability)
The Production of Good
Health
• A generalized health production function
for an individual:
Health = H (Profile, Medical Care,
Lifestyle, Socioeconomic Status,
Environment)
• Health: level of health at a point in time
• Medical Care: the quantity of medical care
consumed
• Lifestyle: a set of lifestyle variables
• Socioeconomic status: the joint effect of
social and economic factors
• Environment: a vector of environmental
factors
• Law of diminishing marginal productivity exists
• MPq = ∆H/∆q

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