Health Economics and Financing Final Lecture Notes

Vocabulary practice flashcards covering health economics, efficiency types, GDP concepts, comparative health expenditure metrics between the Philippines and the USA, features of health financing systems, and risk-pooling mechanisms.

Health economics

The application of economic theories, tools, and concepts of economics as a discipline to the topics of health and healthcare.

Behavioral economics (insurance effect)

The observation under behavioral economics that a person's behavior changes when he is insured.

Core economic challenge in healthcare

The need to allocate limited resources to satisfy unlimited wants, which makes addressing all public healthcare needs difficult.

Government prioritization criteria

The factors that determine how government allocates scarce health resources, specifically the attitude and severity of the disease.

Covid vs. dengue

An example demonstrating how the government must prioritize competing diseases based on severity and public attitude.

Prerequisite for efficiency

An activity is only efficient if it is effective, meaning it must be able to achieve the intended goal.

Effective

Being able to achieve the desired goal.

Technical efficiency

Carrying out activities with the least utilization of resources.

Oral health education program (efficiency example)

An example of technical efficiency where the objective is to increase people's knowledge to improve oral health using minimal resources.

Allocative efficiency

Directing resources to their most productive use through proper allocation, especially applicable when analyzing government agencies.

Dental clinic allocative efficiency example

An example of allocative efficiency where an entity chooses to fund specific services or departments where it can earn more.

Gross Domestic Product (GDP)

The total monetary value of all finished products and goods produced domestically within a country.

GDP index purpose

An economic index used to determine how strong a country's economy is.

GDP inclusion criterion

The rule that a finished product will only be included in the GDP if there is a payment done.

Out of pocket expense

Paying for a healthcare service directly using your own money.

Rationale for lowering out of pocket expenses

The goal of countries to alleviate heavy financial burden and eliminate equity problems among citizens.

Equity problem of out of pocket spending

The problem wherein some individuals experience a much higher financial burden than others when paying directly for care.

Heavy financial burden

A significant adverse economic consequence placed on patients by high out-of-pocket medical costs.

Current health expenditure per capita (Philippines)

$$132.90$$

Current health expenditure per capita (USA)

$$10246.14$$

Current health expenditure % of GDP (Philippines)

$$4.45\%$$

Current health expenditure % of GDP (USA)

$$17.06\%$$

Out of pocket expenditure (% of current health expenditure) (Philippines)

$$53.05\%$$

Out of pocket expenditure (% of current health expenditure) (USA)

$$10.99\%$$

Domestic general government health expenditure (Philippines)

$$31.91$$

Domestic general government health expenditure (USA)

$$50.16$$

Domestic private health expenditure (Philippines)

$$65.50$$

Domestic private health expenditure (USA)

$$49.84$$

Domestic general government health expenditure per capita (Philippines)

$$42.41$$

Domestic general government health expenditure per capita (USA)

$$5139.27$$

Government financing limitation

The structural constraint that the government cannot finance all health problems.

Efficiency and equity implications of out of pocket costs

Severe adverse consequences that arise across a health system when medical expenses are paid directly out of pocket.

Origin of health finances

The principle that all finances used in the health system are derived from the population.

Spending optimization rule ('How much')

The economic balance condition where spending is optimized when $\text{marginal benefit} = \text{marginal cost}$.

Marginal benefit

The incremental benefit gained from additional health expenditure, which should equal marginal cost at optimal funding.

Marginal cost

The incremental cost incurred from additional health funding, which balances against marginal benefit.

Income-level spending comparison principle

The rule that a country should only compare its health spending with other countries having the same income level.

First world countries spending comparison

An impractical comparison for developing nations to make regarding their national health expenditures.

Resource efficiency between sectors

A comparative evaluation framework assessed using cost-minimization, cost-effectiveness, and cost-benefit analyses.

Cost-minimization analysis

An economic evaluation tool used to compare interventions that achieve identical outcomes to find the least expensive alternative.

Cost-effectiveness analysis

An economic assessment method comparing relative costs and health outcomes across different interventions.

Cost-benefit analysis

An evaluation technique that measures both costs and outcomes in monetary units to determine overall net value.

Sufficient fundings

A feature of a good health financing system ensuring adequate resources are provided to meet the community's healthcare needs.

Proper process of redistribution

A feature of a good health financing system where poor people receive more resources from the government than rich people.

Law of PhilHealth

Legal policy in the Philippines designed to protect poor people through subsidized healthcare coverage and redistributive financing.

Fair contribution

A feature of a good health financing system where each person contributes fairly to funding based on ability to pay.

Government budget prevention feature

A characteristic of a good health financing system that prevents healthcare costs from disproportionately consuming the government budget.

Risk aversion

The behavior wherein all people try to avoid risks such as financial burden and losing money.

Risk pooling

The mechanism of dividing the risk of financial burden among many people, which is a common concept in insurance.

Insurance risk mechanism

The application of risk pooling to spread healthcare costs and insulate individuals from severe financial loss.

Saving money (health risk mitigation)

An individual method to avoid financial burden by accumulating funds in advance.

Limitations of saving money for health

The inherent problem that saving money is difficult and insufficient when unplanned health problems suddenly arise.

Unplanned health problems

Unexpected medical emergencies that quickly deplete personal savings and impose sudden financial strain.

Financing system pooling financial consequences

A health financing architecture structured around risk aversion, risk pooling, and overcoming the limits of personal savings.

Unlimited wants vs. limited resources

The foundational economic conflict requiring governments to establish strict prioritization in health service funding.

Severity of disease

A primary criterion used by government decision-makers to evaluate and prioritize health funding between competing conditions.

Public attitude towards disease

A socio-political factor that influences which diseases the government chooses to prioritize for healthcare financing.

Least utilization of resources

The core operational objective when striving for technical efficiency in program delivery.

Most productive use of resources

The objective of allocative efficiency when assigning capital across agencies or private clinical facilities.

Domestic private health expenditure comparison

The comparison showing private expenditure accounts for $65.50$ in the Philippines versus $49.84$ in the USA.