Public Health Lecture 5 Economics as Applied to Public Health

Short introduction to public health economics

1. Foundations of
Public Health
Lecture5-Economics as
Applied to Public Health
(Public Health Economics)
PhuaKai Lit, PhD (Johns Hopkins)
Retired public health professor
(Monash University Malaysia School
of Medicine and Health Sciences)

2. Lecture Objectives
Whatis “Public Health Economics”?
Useful concepts from Economics
Availability, accessibility, affordability of care
Price and quality issues
Financing of health care (including long term care)
Challenge of rising health care costs to individuals
and governments
Health care cost control strategies

3. Public Health Economics
Whatis “Public Health Economics”?
A definition would be the application of economic
thinking to the handling of public health challenges.

4. Useful Concepts from Economics
Rationality -goal-oriented behaviour,
calculative behaviour (take into consideration
benefits versus costs or risks versus payoffs)
Efficiency -e.g. maximum output using
minimum input, lowest cost way of reaching
a target. Economic evaluation tools are used.
Scarcity -time, money, physical resources,
human resources etc are limited. Make the
best use of these.
Market forces (supply/demand) versus
Government regulation (laws)
Opportunity cost: do X, cannot do Y

5. Basic Concepts
Availability -a health care resource is actually
physically present
Accessibility -geographical e.g. no need to travel
too far or too long to reach a hospital, cultural e.g.
psychiatric care provided is considered acceptable
within the local cultural context, informational e.g.
residents of a region are aware of what kinds of
care are present (especially care supplied by
NGOs)
Affordability -can pay for health care without
spending too much, going into debt or becoming
bankrupt
Price -GP visit, hospitalisation, long term care,
pharmaceutical drugs
Quality -care provided is of reasonable quality

6. Financing
At the societal level, this refers to the raising of
funds and the spending of funds on health care
services (including public health services).
Funds can be raised through taxation (general
taxes or ear-marked taxes), foreign aid (given by
rich country governments to poor countries, or by
NGOs from foreign countries), financial asistance
from international agencies such as the WHO (for
disease control campaigns).
Funds can also be raised through compulsory
schemes such as a mandatory National Health
Insurance scheme (for care of individuals).
Governments tend to spend more on public
curative services (such as hospitals) than on public
health activities such as environmental health
programmes.

7. 7
Cost Control
Governments have to grapple with the challenge
of rising costs (e.g. due to new health
technology, population ageing, new vaccines and
drugs etc) coupled with limited budgets.
They need to study the “burden of disease”
within their respective countries and reallocate
their national budgets accordingly e.g. spend
more on preventing costly chronic diseases such
as diabetes through health education campaigns,
vaccinating against infectious diseases etc
(primary prevention), spend more on early
detection and treatment of certain cancers
(secondary prevention)

8. 8
Some Cost Control Strategies
Manage the introduction of expensive new
technology e.g. negotiate lower drug and vaccine
prices with private sector drug companies
Place more emphasis on prevention of chronic
and degenerative diseases e.g. prevent
cardiovascular diseases through “healthy
lifestyle” education campaigns, vaccinate women
against HPV (virus linked to cervical cancer)
Make more use of lower cost personnel in public
health campaigns e.g. use public health nurses
rather than doctors

9. Thank You