What is health economics?

Health economics is concerned with how society uses scarce resources to meet the demand and need for healthcare services.

Resources are finite (e.g. there are only so many doctors, hospital beds, equipment and a limited amount of time available), but in contrast, demand for health and health care is infinite. To create a balance between finite resources and infinite wants and needs, choices are necessary and consequently costs and benefits must be compared. Pursuing one course of action, for instance introducing a screening programme, means that there are fewer resources available to provide for other services. Hence, there is a need to prioritise the choices available (e.g. do you utilise your scarce resources to implement interventions to increase physical exercise or reduce tobacco consumption?).

It is often assumed that health economics is only, or mostly, concerned with costs associated with a treatment or programme, but this could not be further from the truth. While costs are an important aspect of this field, the measurement of the valuation of health is one of the key elements of economic evaluation in health care. An important feature of health is that it includes elements (e.g. pain, symptoms or affect) that are experienced by an individual. A common approach to describing an individual’s health is to elicit self-reports of levels on various health dimensions using standardized numerical scoring systems (e.g. SF-36, EQ-5D etc.).