HETAR

2nd shifting
I. Health economics
o Health definition given by WHO
- state of mental, physical & social well-being
- does not merely connote absence of illness
- it is a multi-factorial phenomenon
o The study of health economics proves important and interesting in:
- the size of the contribution of the health sector to the overall economy
- the national policy concerns resulting from the importance many people attach to the economic
problems they face in pursuing and maintaining their health
How will the government promote better health for everyone?
- Many health issues that have proven substantial economic element
o Deals with manipulation of factors that should be able to give people better health. This poses a problem
for health planners since health is difficult to both quantify and qualify

II. Quality health and economics
o Increase in the quality of care contribute to increase in spending. Often, the focus is on ensuring quality
through professional licensure & certification and, especially for hospitals, through quality assurance
programs
- ex. taking the board exam after the 4-year course
o Concerns arise about access to high quality health care for those without insurance or with minimal insurance.
- developing country (ex. Philippines) out of the pocket expense for medical care
- developed country insurance
o Some also are concerned that the quality of health care in the US (even in the Philippines) is often expensive,
especially for some forms of high-tech treatment
- the cost may exceed the benefit especially if faced with scarce resources
o Production, costs and insurance are naturally issues that involve economics, but many other health issues
have economic components, even though they may seem to be purely medical concerns
- Best evidence-based practice is when 4 factors are considered:
Patients values/preferences
- the patient is the one receiving and paying for the treatment
Best research evidence
Clinical expertise
Local context
- Contextualize the decisions ex. if you are in a developing country

III. Economics plays an important role in addressing these questions
o What should the government play in terms of providing better health care for its people?
- Govt. plays an important role contributes to the medical expenses
Ex. Philhealth
o What health care investment should be developed?
- More insurance companies should enter our market
Philippines = only few companies = expensive, limited coverage
More companies = more competitive prices = bigger coverage of the expense that they
would shoulder

 o Should cigarette advertising be banned?
- We cannot just say to people that they should stop smoking
- Policies should be developed to address secondhand & third hand smoke issues

IV. Features of economic analysis
o Scarcity of societal & personal resource
- We spend for our own medical care we should get the best decisions from those scarce
resources
o Assumption of rational decision making
- Rational people think at the margin
- MB > MC = good decision to make
o Concept of marginal analysis
- Consider the MB & MC of an additional expense & additional benefit as part of the treatment
o Use of models as metaphors
- Economic models

V. The determinants of health (scenarios)
o Absence of symptoms does not necessarily connote healthfulness
- An individual who does not experience any symptoms of disease may not necessarily be healthy
- Ex. elevated blood sugar diabetes
an individual may not necessarily feel anything when a disease process has already started
o The presence of symptoms does not necessarily connote illness
- Ex. A woman who experiences nausea & vomiting during the early stages of pregnancy may still be
considered as healthy, as such can be considered normal during early pregnancy
- Normal because the woman is pregnant healthy
o There are varying degrees or states of health
- Health is relative
- Ex. A 35-year-old individual who is able to run 10 KM may be healthier than any other individual
who is only able to climb a few flights of stairs, all other things held constant

VI. Determinants of health
o Underlying factors
- Indirectly affecting health outcomes
- Socio-economic, demographic, cultural factors
o Proximate factors
- Directly affects the health outcomes
- Can be innate to a person (ex. physiological - nutrient intake or fertility) or external factors
(environmental contamination, injuries, health care service utilization)
- Remember that the treatment of illnesses should not only be focused on the sick individual but
also on factors which directly cause them
o Health outcomes
- Objective measures of health
- Parameters used to measure the health condition of individuals, communities or countries
- Standardized measures which are understood & applied internationally
- Lifestyle affects health outcomes

 Underlying factors Proximate factors Health outcomes
1) Individuals perspective 1) Innate 1) Life expectancy
a) Age a) Nutrient dietary intake 2) Mortality and Morbidity
b) Sex - Barangay day care centers 3) Nutritional Status
c) Educational attainment - Vit. A campaign 4) Disability
d) Occupation
b) Fertility
e) Health benefits
f) Attitudes - Responsible parenthood
informative drive
2) Households perspective
a) Income 2) External
- you are spending for your a) Environmental contamination
health - Anti-pollution campaign
b) Wealth b) Injuries
c) Age and sex composition - Dont drink and drive
d) Social network
c) Health care service utilization
3) Communitys perspective
- Oplan bakuna with Jollibee
a) Ecological climate
(CSR)
b) Markets and prices

c) Transportation
d) Structure

o Health intervention does not only focus on the individual
o Economics seeks to maximize the output of any given input
o Government (health planners) should be present in the market, providing us policies & the like to promote
better health for everyone
o Examples:
- educational attainment & health outcomes = direct relationship
Educated capacity to think, more productive avail health services
- high intake of dietary fats which results in high blood cholesterol levels & environmental exposure or
constant exposure to air pollution which results in chronic lung diseases which are also in cigarettes
CSR = corporate social responsibility
Ex. Oplan bakuna with Jollibee = Jollibee is compensating for the fast food, pollution
Underlying determinants Proximate determinants Health outcomes
Individual: Increased incidence in workers lung
Exposure to mining contaminants
Occupation as a coal miner diseases
Household:
Poor nutritional intake Poor nutritional status (malnourished)
Low household income
Community:
Poor health care service utilization More deaths in the area
Poor transportation

VII. Relationship of health and economics

o Theoretical relationship between health & economics which operates like a cycle:
- Better economy allows countries to allocate more financial support, technological development,
human resources for health producing activities & programs
- More resources allocated & used for health care services will lead to improvements in health
status (individual/society)
- The improvements in health status then lead to better productivity, more specifically among
workers
- This then contributes for a better economy
 Economic
growth/devel
opment

Filipinos
are Improvement in
productive health care
sector

Improved
Better/efficient
healthcare
provision of health
status among
care services
Filipinos

VIII. Market forces of supply & demand

o Supply & Demand
- Forces that make market economies work
- Behavior & intervention of buyers & sellers
- Determine the price in a market economy & how prices in turn allocate the economys scarce
resources
Market economy = no government intervention
o Market & Competition
- A market is a group of buyers & sellers of a particular good or service
- Buyers determine demand
- Sellers determine supply
- Consider goods & services being traded
o Types of market
- Thin Market
# of participants in the market are few
Mostly found amongst developing countries
- Missing Market
1 side of the transaction is missing
Still considered a market because there are buyers & sellers interacting
Actual/potential are both included
- Actual the good was bought
- Potential the good was not yet sold but theyve already interacted with each other
o Spectrum of markets with respect to competition

PCM IM M

- A competitive market is a market in which there are many buyers & sellers so that each has a
negligible impact on the market price (perfect competition)
Numerous buyers & sellers each has no influence over market price
Products are the same (homogenous) highly substitutable to one another
Buyers & sellers are price takers accepts price as it is
 - Monopoly
Sole seller in the market you have substantial control in terms of its price
But, no complete control over the price of the good
Who determines the price in the market? the market itself
Forces of supply & demand working together to come up with the price of the good
- Imperfect Competition
1. Oligopoly
Few sellers because to get substantial control, you block new producers
Not always aggressive competition
Cartel = higher joint profit instead of competing against each other
2. Monopolistic Competition
2 markets in 1 (PCM & M)
Many sellers (from PCM)
Each seller may set price for its own products (from M)
Slightly differentiated products
Ex. Manual & electric toothbrush slightly differentiated = different price
IX. Holistic way of doing things/understanding things in economics (3 approaches):
1. Explain things intuitively
2. Make use of math (if possible)
- Concise
3. Make use of graphs
- to simplify things

X. Demand
o Law of Demand
- States that other things equal (ceteris paribus), the quantity demanded of a good falls when the
price of the good rises
- Qd & P are inversely related
- Price = independent; Qd = dependent
- Law = applicable in all scenarios, proven
Law of demand focuses on 2 variables: QD an P all other things held constant; ceteris
paribus
o Quantity demanded
- Amount of a good or serves that buyers are willing and able to purchase
o Law of demand graph (demand curve)
- Graph of the relationship between the prices of a good & the quantity demanded
- Downward sloping
o Violates the law of demand
- Veblen good
Luxury goods
Maintains social status
- Giffen good
Robert Giffen
Positive relationship
Even though there is Price, there is still Consumption
The other goods are increasing price at a greater rate
Staple food
Ex. Price of rice (staple) and Price of meat you would still buy rice
o Demand Schedule
- Table that shows the relationship between the price of the good & the quantity demanded
Price Quantity Demanded
0 24
5 20
10 16

o Market Demand vs. Individual Demand

- Market Demand
Sum of all individual demands for a particular good or service
Individual demand curves are summed horizontally (in the graph) to obtain the market
demand curve
Price of a good Person As demand Person Bs demand Market Demand
0 24 14 38
5 20 12 32
10 16 10 26

o Change in QD vs. Change in D

- Change in QD
Movement/s along the demand curve
Change in price

*Movements along the demand curve *Shift in the demand curve

*Price is the only factor because all *Non-price factors
other things are held constant

XI. Variables that shifts the demand curve (Non-price factors)
1. Consumer Income
- Normal & inferior goods are subjective
- Normal good
Income = Demand
Income = tendency is to consume more of the good
- Inferior good
Income = Demand
Income = tendency to consume less of the good
2. Price of related goods
- Substitutes = fall in the price of one good reduces the demand for another good
Ex. price of apples = demand for oranges
- Complementary = fall in the price of one good increases the demand for another good
Ex. price of toothbrush = demand for toothpaste
3. Tastes & Preferences
- Preference of consumers toward the product
- Trends
4. Number of buyers
- Preference of consumers toward the product
- buyers = market demand
- buyers = demand
5. Expectations (on future relative prices)
- Ex. After 12 MN, the price of gas will increase = (before 12 MN) demand
- After 12 MN, the price of gas will decrease = (after 12MN) demand
6. Season, Weather or Climate
- Ex. Rainy season = demand for jackets, raincoats
XII. Supply
o Law of Supply
- Other things equal, the quantity supplied of a good rises when the price of the good rises
- Direct relationship between price of the good & quantity supplied
- Price = independent; QS = dependent
o Quantity Supplied
- Amount of a good that sellers are willing and able to sell
o Law of supply graph (supply curve)
- Graph of the relationship between the price of a good & quantity supplied
- Upward sloping supply curve (positive relationship = because producers want to maximize profit)

 o Supply Schedule
- Shows the relationship between the price of the good & the quantity supplied
Price Quantity supplied
10 2
15 4
20 6

o Market Supply vs. Individual Supply
- Market Supply - sum of all individual supplied for all sellers of a particular good or service
Price Firm As supply Firm Bs supply Market Supply
30 40 20 60
40 100 70 170

o Change in QS vs. Change in S

*Movements along the supply curve *Shift in the supply curve
*Price is the only factor because all *Non-price factors
other things are held constant


XIII. Variables that shift the supply curve (Non-price factors)
1. Input Prices
- input price = supply
2. Technology
- Determines the capacity to produce goods & services
- Over time, technology progresses
- Higher level of technology = higher efficiency = Supply
3. Expectations
- Expect price = supply
4. Number of sellers
- sellers = supply
5. Government policies (taxes & subsidies)
- Imposition of tax = supply
- Subsidies (inverse; govt. gives financial support) = supply


XIV. Supply & Demand together
o Equilibrium price
- Price that balances QS & QD
- In a graph, it is the price at which the supply & demand curves intersect
- Market-clearing price
o Equilibrium quantity
- The QS & QD at the equilibrium price
- On a graph, it is the quantity at which the supply & demand curves intersect

o Surplus
- QS > QD
- Without government intervention, the market can still go back to the point of equilibrium
Unsold goods & services = no profit translation = downward pressure to price
o Shortage
- QD > QS
- Too many people buying limited stocks = avenue for the firm to price

o Graphing both supply & demand
- Identify which shifts (S, D or Both)
- Identify if or
- After the shift/s, identify the new equilibrium points
Look at the new equilibrium price & quantity