Economic Analysis in Healthcare

by Morris, Stephen; Devlin, Nancy; Parkin, David; Spencer, Anne

• ISBN13: 9781119951490
• ISBN10: 1119951496
• Edition: 2nd
• Format: Paperback
• Copyright: 2012-05-07
• Publisher: Wiley

Summary

Economic Analysis in Health Care, 2e provides a comprehensive coverage of both the economics of health care systems and the evaluation of global health care technologies. The text is designed to provide international perspective and knowledge of global economic analysis. Furthermore, it creates a useful balance of theoretical treatment and practical applications throughout and focuses uniquely on both market-related and economics evaluation aspects of health economics. With up-to-date case studies and examples from both the UK, Europe and the rest of the world, Economic Analysis in Healthcare: Adopts an international perspective towards topics in health economics Creates a useful balance of theoretical treatment and practical application throughout the book Focuses uniquely on both market-related and economic evaluation aspects of health economics. Provides new chapters on: health care labor markets, the pharmaceutical industry, and the economics of public health. Includes new material on the economics of social care Offers a pedagogical framework that has been improved by adding one page abstracts at the start of each chapter and comprehensive exercises at the end of each chapter.

Author Biography

Stephen Morris is Professor of Health Economics at University College London. Nancy Devlin is Director of Research at the Office of Health Economics, London and is an Honorary Professor at the Centre for Health Economics, University of York. David Parkin is Chief Economist at NHS South of England and Visiting Professor at City University London. Anne Spencer is an Associate Professor in Health Economics at the University of Exeter.

Table of Contents

Preface	p. xiii
Introduction to economic analysis in health care	p. 1
Life, death, and big business: why health economics is important	p. 1
Health care as an economic good	p. 3
Health and health care	p. 7
Wants, demands and needs	p. 8
The production of health and health care	p. 9
Deciding who gets what in health care	p. 10
Is the market for health care special?	p. 12
Describing versus evaluating the use of health care resources	p. 14
Judging the use of health care resources	p. 17
The demand for health care	p. 21
Why study demand? Profits, policy and improving health	p. 21
Consumer choice theory	p. 22
Preferences and utility	p. 22
Budget constraints and maximisation	p. 25
Demand functions	p. 27
The determinants of demand	p. 28
Estimating demand functions	p. 34
Price and income elasticity of demand	p. 35
Modelling choices about health	p. 37
Understanding consumption of health and health care	p. 38
Understanding investment in health care	p. 39
Predictions of the Grossman model	p. 42
Needs, wants and demands	p. 43
Asymmetry of information and imperfect agency	p. 44
Aggregate demand for health care: theory and evidence	p. 48
The production and costs of health care	p. 53
Introduction	p. 53
The theory of production	p. 54
Production functions	p. 54
Marginal products	p. 55
Technical efficiency and isoquants	p. 56
Substitutability between inputs	p. 58
Production frontiers	p. 60
Multi-product firms	p. 60
Returns to scale, additivity and fixed factors	p. 63
Costs	p. 67
Costs and production	p. 67
Cost functions	p. 71
Scale economies, long- and short-run cost functions and scope economies	p. 73
The supply of health care	p. 79
Firms, markets and industries in the health care sector of the economy	p. 79
Structure, conduct and performance in the health care industry	p. 81
Profit maximisation models	p. 84
How firms maximise profits	p. 85
Perfect competition	p. 86
Monopoly	p. 92
Monopolistic competition	p. 94
Oligopoly	p. 97
Game theory	p. 98
Goals other than profit maximisation	p. 101
Growth maximisation	p. 102
Behavioural theories of the firm	p. 104
Utility maximisation	p. 106
Maximising net income per physician	p. 108
Competition, contestability and industrial policy	p. 109
Markets, market failure and the role of government in health care	p. 114
Introduction	p. 114
Using perfectly competitive markets to allocate resources	p. 114
Equilibrium in competitive markets	p. 114
The efficiency of competitive markets	p. 115
Market failure in health care	p. 117
Externalities	p. 117
Caring externalities	p. 119
Market power	p. 120
Public goods	p. 121
Information imperfections	p. 123
Government intervention in health care	p. 124
Direct government involvement in the finance and provision of health care	p. 126
Taxes and subsidies	p. 127
Regulation	p. 128
Provision of information	p. 129
The theory of second best	p. 130
Government failure	p. 131
Health insurance and health care financing	p. 133
Uncertainty and health care financing	p. 133
Risk and the demand for health insurance	p. 135
Risk attitudes and the diminishing marginal utility of income	p. 135
The demand for insurance and indifference	p. 137
The market for health insurance and market failure	p. 139
The supply of health insurance	p. 139
Adverse selection	p. 141
Moral hazard	p. 145
Non-price competition	p. 147
Incomplete coverage	p. 147
Reimbursement	p. 148
Retrospective reimbursement	p. 149
Prospective reimbursement	p. 149
Integration between third-party payers and health care providers	p. 152
Preferred provider organisations	p. 153
Health maintenance organisations	p. 153
Point-of-service plans	p. 154
Health care financing systems	p. 154
Equity in health care	p. 163
Introduction	p. 163
Equity in the finance of health care	p. 165
Vertical equity	p. 165
Kakwani's progressivity index	p. 166
Horizontal equity	p. 169
Equity in distribution	p. 170
Equity in the distribution of health care, of health or of utility?	p. 170
Some concepts of equity	p. 171
Measuring equity in distribution	p. 174
Horizontal inequity	p. 174
Vertical equity	p. 179
Inequalities in health	p. 180
Health care labour markets	p. 184
Labour as a factor of health care production	p. 184
Supply of health care labour	p. 186
Demand for health care labour	p. 189
Wages and employment in perfect labour markets	p. 192
Economic rent and transfer earnings	p. 193
Wage determination and employment in imperfect labour markets	p. 194
Employers and workers with market power	p. 194
Labour markets slow to respond to changes in demand and supply	p. 197
Non-maximising behaviour	p. 198
Discrimination	p. 198
Health care labour market shortages	p. 201
Welfarist and non-welfarist foundations of economic evaluation	p. 204
The normative economics foundations of economic evaluation	p. 204
Welfare economics	p. 205
The Pareto principle	p. 206
Potential Pareto improvements	p. 210
Social welfare functions	p. 213
Measurability and comparability of utility	p. 218
The application of welfare economics	p. 219
Non-welfarism	p. 223
Is there a link between welfarism and non-welfarism?	p. 229
Principles of economic evaluation in health care	p. 232
What is economic evaluation?	p. 232
The economics foundations of economic evaluation	p. 233
Cost-benefit analysis	p. 233
Cost-effectiveness analysis	p. 236
Economic evaluation applied to health care programmes	p. 238
Decision rules for cost-benefit analysis	p. 241
Decision rules for cost-effectiveness and cost-utility analysis	p. 242
Ratio measures	p. 242
The cost-effectiveness plane	p. 243
The cost-effectiveness threshold and acceptability	p. 244
The incremental cost-effectiveness ratio	p. 245
Net benefits	p. 248
Probabilistic approaches	p. 249
Equity in economic evaluation	p. 250
Measuring and valuing health care output	p. 253
Introduction	p. 253
Monetary valuations of health care benefits	p. 253
Revealed preference	p. 254
Stated preference	p. 255
Discrete choice experiments	p. 259
The measurement of health outcomes	p. 261
Making health status indicators fit for purpose	p. 262
Generic and specific measures	p. 264
Profiles and indices	p. 265
Measuring health-related quality of life: an indifference curve approach	p. 269
The measurement of health gain	p. 270
Non-monetary valuation of health states	p. 273
Rating scales, category scales and visual analogue scales	p. 274
The standard gamble	p. 274
Time trade-off	p. 276
How do we choose between these methods?	p. 278
Multi-attribute utility measures	p. 278
The valuation of health states: willingness to pay for health changes	p. 280
The value of life	p. 284
Economic evaluation methods	p. 286
Introduction	p. 286
Selecting the viewpoint	p. 286
Estimating costs	p. 290
Methods and data used in estimating costs	p. 292
Which costs should we include?	p. 292
Should future costs and cost savings be included?	p. 294
What if cost data are from different time periods?	p. 294
The measurement of health gain	p. 295
Measuring quality-adjusted life year (QALY) gains	p. 295
Measuring healthy year equivalents (HYEs)	p. 298
Measuring disability-adjusted life years (DALYs)	p. 298
Discounting	p. 299
The rationale for discounting monetary costs and benefits	p. 299
The discounting formula	p. 300
The choice of discount rate	p. 301
Discounting health effects	p. 303
Modelling-based economic evaluation	p. 306
Using multiple sources of data	p. 306
Decision analysis	p. 308
Markov models	p. 311
Trial-based economic evaluation	p. 314
Dealing with uncertainty: sensitivity analysis	p. 315
One-way sensitivity analysis	p. 315
Multi-way sensitivity analysis	p. 317
Statistically-based sensitivity analysis	p. 318
The use of economic evaluation in decision making	p. 321
The decision-making context: why is economic evaluation used?	p. 321
Who buys economic evaluations? Does it matter?	p. 330
Is economic efficiency all that matters?	p. 330
Need	p. 331
Equity	p. 333
Process-of-care considerations	p. 334
Ethical imperatives	p. 335
How is economic evaluation used to make decisions in practice?	p. 336
Cost-effectiveness league tables	p. 336
Programme budgeting and marginal analysis	p. 339
Programme budgeting	p. 339
Marginal analysis	p. 341
Cost-effectiveness thresholds	p. 341
Evaluating economic evaluation	p. 346
References	p. 351
Author Index	p. 369
Subject Index	p. 373
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