Global Perspectives of Economics and Health Care

Across the world there is tremendous variation in the way health care is provided and funded and most importantly in healthcare outcomes. Yet concern about the financing of health care has become a matter of great concern in every economy. In developed countries, rapid growth in medical innovations and technology and the cost of caring for an aging population have combined to make soaring healthcare costs a primary concern. Developing countries plagued with a struggling economy find themselves hard-pressed to find sources of funding for providing even basic medical care for a growing population. Economics is the study of how to allocate scarce resources across unlimited wants and needs. It is no wonder then that in a world faced with the problem of ever-growing demands on its healthcare resources amid tightening budgets, the field of health economics has grown exponentially more important in academic and policy settings. Health economists are often interested in analyzing whether healthcare resources are utilized efficiently and whether the proper incentives and healthcare systems exist or can be created to ensure efficiency. The current system for the provision of health care in countries such as the United States is rather complex, often with the patient receiving care from providers who are paid by a third party such as a private or public health insurance organization. However, there are currently more than 45 million people in the United States without insurance coverage. Providing unpaid medical care for these uninsured segments of the population results in cost shifting that makes health insurance more expensive. Since the early 1970s, the emergence of managed care organizations in the United States (often centered around health insurance companies) with its emphasis on cost effectiveness, return 38522_CH03_073_102.qxp 8/28/07 12:43 PM Page 73