Implications of Health Economics Concepts on Healthcare


The stakeholders in the field of health need to understand some of the economic concepts. These concepts have a direct impact on this field in various ways. Economic concepts will define the accessibility of healthcare products to the people in terms of cost. The resources needed in this field must also meet the expectations of the stakeholders to ensure that the quality of the services offered is within the expected standards (Bastida, Oliva, Antoñanzas & Altés, 2011).

The government’s involvement in this sector also has a massive impact that should not be ignored by the stakeholders. In this study, the focus is to create an understanding of the health economic concepts, and how these concepts impact the quality of the healthcare services delivered to the customers.

How Economic Concepts Impact the World of Health Care Economics

According to Sloan and Hsieh (2012), various economic concepts have varying impacts on the world of healthcare economics. The following are some of the core economic concepts and how they impact the world of healthcare economics.

Health demand and supply

The health demand and supply may have a direct impact on the cost of healthcare within a given locality. When the demand for healthcare products is high, but the supply is low, the cost of the healthcare products will increase. On the other hand, if the demand for the products is low while the supply is high, the price may considerably drop.


The price elasticity of demand for healthcare products will define how the prices for these products can be adjusted. When the demand is price inelastic, then it means that the healthcare providers can adjust the price for the products without affecting the demand (Annemans, 2008). However, when the price elasticity is high, then any small change in the price will have a major impact on the demand for the products.


The resources needed in the delivery of quality healthcare products may define the cost of the products and their demand. When the resources are available, the quality of healthcare will be high, and the prices charged will be below. This will increase the demand for these products. On the other hand, scarcity of these products may lower the quality of the products offered and increase their prices, the fact that will reduce their demand (Jones, 2011).

Health measures

Measures put in place to guide the delivery of healthcare to people may have positive or negative impacts on the quality of healthcare products within a country. When a government introduces restrictive measures against the private sector, then the quality of the healthcare products may likely reduce. If the government introduces positive measures for all the players and the standard quality of the products in the market, the quality of the products is likely to improve.


The costs of the healthcare products have direct impacts on their demand within a given market. When the costs of the products are high, only a few may be able to afford them, which means that there will be a drop in demand (Feldstein, 2012). When the cost for the products is low, more people will be able to afford the products, which will increase their demand.

The value of healthcare professionals to understanding health economics

Healthcare professionals and decision-makers need to understand the discipline of healthcare economics because it will guide them in their decision-making process. They need to understand that the quality of the services they offer may have a direct impact on the level of demand for the products. The decision-makers will also understand that they cannot just make arbitrary decisions on the prices of healthcare products. They will need to understand the ability of the people to pay the set prices as a way of maintaining the affordability of these products to everyone.

The complexity of the nature of healthcare products

It is important to consider the complex nature of healthcare when examining the economic principles which are related to the delivery of healthcare. Sometimes it may not be possible to determine the cost of healthcare products based on the demand and supply. This is so because some of the processes may require high technology which may be very costly (Cutler, 2012). In such instances, even when the demand for a product may be low, the price may remain high because of the complexities of delivering the service. This complexity should be considered when making the relevant decisions about healthcare products.

Benefits of knowing about health economics concerning the involvement of government in the healthcare delivery

Learning about health economics concerning government involvement in the healthcare delivery process through financing and policymaking is very important. It helps in bringing an understanding to the role of government in moderating the prices of healthcare products to ensure that it is affordable to all the stakeholders.

According to Lee (2010), the government may have to subsidize some of the costly medical products to make them affordable to members of the public. It also helps in bringing an understanding as to when the government may need to make direct interventions about the policies used by the public sector to deliver the healthcare products to the members of the public.

Benefits of knowledge about healthcare economics in the private sector

The private sector plays a major role in the provision of healthcare services to the public within the United States. It is important to have adequate knowledge about health economics that is related to the private sector government involvement in healthcare economics, financing, and delivery (Whittington, 2008).

The policies that the government lays for the private sector will always define the supply of healthcare products by the private sector. Putting restrictive measures like high rates of taxation may reduce the capacity of this sector to deliver quality healthcare. On the other hand, putting measures that allow for the public-private partnership may motivate the growth of the private sector and improve the quality of services they deliver to their customers.


It is clear from the discussion above that understanding healthcare economics by all the stakeholders in the healthcare sector is important in improving the services they deliver to the public. The government, as the regulator and financer, needed to understand that it has a major role to play in developing the policy measures that would maintain a high quality of healthcare products at affordable prices. It also needs to know that some restrictions against the private sector players may affect the general quality of healthcare in the country because the public sector will not have competition. Other players must also understand their role in the healthcare system.


Annemans, L. (2008). Health Economics for Non-economists: An Introduction to the Concepts, Methods and Pitfalls of Health Economic Evaluations. New York: Academia Pr Scientific Publishers.

Bastida, J., Oliva, J., Antoñanzas, F., & Altés, A. (2011). Spanish recommendations on economic evaluation of health technologies. The European Journal of Health Economics, 11(5), 513-520.

Cutler, D. (2012). The Simple Economics of Health Reform. The Economists’ Voice, 2(1), 13-20.

Feldstein, P. J. (2012). Health care economics. Clifton Park, NY: Delmar Cengage Learning.

Jones, A. M. (2011). The Elgar companion to health economics. Cheltenham: Edward Elgar.

Lee, R. (2010). Economics for Healthcare Managers. Journal of Health and Human Services Administration, 33(2), 257-261.

Sloan, F. A., & Hsieh, C. (2012). Health economics. Cambridge, Mass: MIT Press.

Whittington, R. (2008). Introduction to health economics concepts. Flintshire, UK: Greenflint Ltd.

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