About Healthcare Economics

People generally have unlimited wants in most areas of life, including medical care. A person's health care resources, such as physicians and hospitals, can be limited relative to their wants. Health care economics examines the allocation of limited resources to meet society's medical needs.

Significance

• Issues such as the high cost of medical care and the best system for ensuring affordable health coverage for all people make health care economics a significant concern within the larger discipline of economics.

Features

• Health care economics studies such issues as demand for medical care, pharmaceutical prices, competition among health care providers and insurers, and financing of health care services.

History

• A 1963 article by economist Kenneth Arrow, a Nobel prize winner in Economics, is credited by many people as the basis of health care economics as a specialty.

Considerations

• Most economic theories assume that consumers act with full knowledge of available options. In health care, however, patients do not always have adequate information about insurance coverage or needed care.

Debate

• The debates over health care reform in the United States center largely on a central economic question: how best to employ resources in such a way that provides the greatest benefit.