Health economics explained through six questions and answers

Abstract

Health economics as a discipline is described using six questions to be answered: Is health different from all other goods? Is the ‘cost explosion’ the core issue? What is the relative importance of moral hazard and adverse selection in competitive health insurance? What is the relevance of supplier-induced demand? For evaluation, is cost effectiveness the appropriate standard? And finally, can the the very high degree of regulation in health care be justified on economic grounds? While the answers are soundly grounded in microeconomic theory, they show that economists interested in health and health care are far from the caricature of penny-pinching ‘Elephants in a porcelain shop’ (Gbadebo & Reinhardt, 2001).