Economic Analysis in Health Care

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  • Edition: 2nd
  • Format: Paperback
  • Copyright: 2012-06-01
  • Publisher: WILEY JOHN & SONS INC

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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

Prefacep. xiii
Introduction to economic analysis in health carep. 1
Life, death, and big business: why health economics is importantp. 1
Health care as an economic goodp. 3
Health and health carep. 7
Wants, demands and needsp. 8
The production of health and health carep. 9
Deciding who gets what in health carep. 10
Is the market for health care special?p. 12
Describing versus evaluating the use of health care resourcesp. 14
Judging the use of health care resourcesp. 17
The demand for health carep. 21
Why study demand? Profits, policy and improving healthp. 21
Consumer choice theoryp. 22
Preferences and utilityp. 22
Budget constraints and maximisationp. 25
Demand functionsp. 27
The determinants of demandp. 28
Estimating demand functionsp. 34
Price and income elasticity of demandp. 35
Modelling choices about healthp. 37
Understanding consumption of health and health carep. 38
Understanding investment in health carep. 39
Predictions of the Grossman modelp. 42
Needs, wants and demandsp. 43
Asymmetry of information and imperfect agencyp. 44
Aggregate demand for health care: theory and evidencep. 48
The production and costs of health carep. 53
Introductionp. 53
The theory of productionp. 54
Production functionsp. 54
Marginal productsp. 55
Technical efficiency and isoquantsp. 56
Substitutability between inputsp. 58
Production frontiersp. 60
Multi-product firmsp. 60
Returns to scale, additivity and fixed factorsp. 63
Costsp. 67
Costs and productionp. 67
Cost functionsp. 71
Scale economies, long- and short-run cost functions and scope economiesp. 73
The supply of health carep. 79
Firms, markets and industries in the health care sector of the economyp. 79
Structure, conduct and performance in the health care industryp. 81
Profit maximisation modelsp. 84
How firms maximise profitsp. 85
Perfect competitionp. 86
Monopolyp. 92
Monopolistic competitionp. 94
Oligopolyp. 97
Game theoryp. 98
Goals other than profit maximisationp. 101
Growth maximisationp. 102
Behavioural theories of the firmp. 104
Utility maximisationp. 106
Maximising net income per physicianp. 108
Competition, contestability and industrial policyp. 109
Markets, market failure and the role of government in health carep. 114
Introductionp. 114
Using perfectly competitive markets to allocate resourcesp. 114
Equilibrium in competitive marketsp. 114
The efficiency of competitive marketsp. 115
Market failure in health carep. 117
Externalitiesp. 117
Caring externalitiesp. 119
Market powerp. 120
Public goodsp. 121
Information imperfectionsp. 123
Government intervention in health carep. 124
Direct government involvement in the finance and provision of health carep. 126
Taxes and subsidiesp. 127
Regulationp. 128
Provision of informationp. 129
The theory of second bestp. 130
Government failurep. 131
Health insurance and health care financingp. 133
Uncertainty and health care financingp. 133
Risk and the demand for health insurancep. 135
Risk attitudes and the diminishing marginal utility of incomep. 135
The demand for insurance and indifferencep. 137
The market for health insurance and market failurep. 139
The supply of health insurancep. 139
Adverse selectionp. 141
Moral hazardp. 145
Non-price competitionp. 147
Incomplete coveragep. 147
Reimbursementp. 148
Retrospective reimbursementp. 149
Prospective reimbursementp. 149
Integration between third-party payers and health care providersp. 152
Preferred provider organisationsp. 153
Health maintenance organisationsp. 153
Point-of-service plansp. 154
Health care financing systemsp. 154
Equity in health carep. 163
Introductionp. 163
Equity in the finance of health carep. 165
Vertical equityp. 165
Kakwani's progressivity indexp. 166
Horizontal equityp. 169
Equity in distributionp. 170
Equity in the distribution of health care, of health or of utility?p. 170
Some concepts of equityp. 171
Measuring equity in distributionp. 174
Horizontal inequityp. 174
Vertical equityp. 179
Inequalities in healthp. 180
Health care labour marketsp. 184
Labour as a factor of health care productionp. 184
Supply of health care labourp. 186
Demand for health care labourp. 189
Wages and employment in perfect labour marketsp. 192
Economic rent and transfer earningsp. 193
Wage determination and employment in imperfect labour marketsp. 194
Employers and workers with market powerp. 194
Labour markets slow to respond to changes in demand and supplyp. 197
Non-maximising behaviourp. 198
Discriminationp. 198
Health care labour market shortagesp. 201
Welfarist and non-welfarist foundations of economic evaluationp. 204
The normative economics foundations of economic evaluationp. 204
Welfare economicsp. 205
The Pareto principlep. 206
Potential Pareto improvementsp. 210
Social welfare functionsp. 213
Measurability and comparability of utilityp. 218
The application of welfare economicsp. 219
Non-welfarismp. 223
Is there a link between welfarism and non-welfarism?p. 229
Principles of economic evaluation in health carep. 232
What is economic evaluation?p. 232
The economics foundations of economic evaluationp. 233
Cost-benefit analysisp. 233
Cost-effectiveness analysisp. 236
Economic evaluation applied to health care programmesp. 238
Decision rules for cost-benefit analysisp. 241
Decision rules for cost-effectiveness and cost-utility analysisp. 242
Ratio measuresp. 242
The cost-effectiveness planep. 243
The cost-effectiveness threshold and acceptabilityp. 244
The incremental cost-effectiveness ratiop. 245
Net benefitsp. 248
Probabilistic approachesp. 249
Equity in economic evaluationp. 250
Measuring and valuing health care outputp. 253
Introductionp. 253
Monetary valuations of health care benefitsp. 253
Revealed preferencep. 254
Stated preferencep. 255
Discrete choice experimentsp. 259
The measurement of health outcomesp. 261
Making health status indicators fit for purposep. 262
Generic and specific measuresp. 264
Profiles and indicesp. 265
Measuring health-related quality of life: an indifference curve approachp. 269
The measurement of health gainp. 270
Non-monetary valuation of health statesp. 273
Rating scales, category scales and visual analogue scalesp. 274
The standard gamblep. 274
Time trade-offp. 276
How do we choose between these methods?p. 278
Multi-attribute utility measuresp. 278
The valuation of health states: willingness to pay for health changesp. 280
The value of lifep. 284
Economic evaluation methodsp. 286
Introductionp. 286
Selecting the viewpointp. 286
Estimating costsp. 290
Methods and data used in estimating costsp. 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 gainp. 295
Measuring quality-adjusted life year (QALY) gainsp. 295
Measuring healthy year equivalents (HYEs)p. 298
Measuring disability-adjusted life years (DALYs)p. 298
Discountingp. 299
The rationale for discounting monetary costs and benefitsp. 299
The discounting formulap. 300
The choice of discount ratep. 301
Discounting health effectsp. 303
Modelling-based economic evaluationp. 306
Using multiple sources of datap. 306
Decision analysisp. 308
Markov modelsp. 311
Trial-based economic evaluationp. 314
Dealing with uncertainty: sensitivity analysisp. 315
One-way sensitivity analysisp. 315
Multi-way sensitivity analysisp. 317
Statistically-based sensitivity analysisp. 318
The use of economic evaluation in decision makingp. 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
Needp. 331
Equityp. 333
Process-of-care considerationsp. 334
Ethical imperativesp. 335
How is economic evaluation used to make decisions in practice?p. 336
Cost-effectiveness league tablesp. 336
Programme budgeting and marginal analysisp. 339
Programme budgetingp. 339
Marginal analysisp. 341
Cost-effectiveness thresholdsp. 341
Evaluating economic evaluationp. 346
Referencesp. 351
Author Indexp. 369
Subject Indexp. 373
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