Health Economics and Development

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Health Economics and Development
The entire assignment, including all questions should not exceed 2500 words. Approximate word limits are indicative and points will not be deducted if your answers deviate from these guidelines.

In response to the following questions you are expected to apply ‘economics thinking’ and discuss relevant health economics arguments. You should demonstrate appropriate use of the literature and session materials.

Please ANSWER questions 1-3 and either question 4 OR 5 (4 questions in total). Note that some questions may have multiple parts.

Question 1

Programme Budgeting and Marginal Analysis is underpinned by economic concepts of ‘opportunity cost’ and ‘the margin’. Define these two concepts and explain why they are important in managing scarce resources. Then operationalise them by explaining how you would reallocate resources between the two health care programmes below (assuming that maximising benefits from scarce resources is the objective of the health service). (approximately 500 words)

Programme A Programme B
Marginal cost £500,000 £250,000
Marginal benefits 2000 units 1500 units

(20% of total mark)
Question 2

There are several methods available for reducing hypertension. The first step is usually assumed to be health promotion for the population at large (which we will call population intervention). The next step would involve routine screening by general practitioners and, for those identified as having hypertension, to provide dietary advice. As this latter approach would be done in combination with the population intervention, we will call this the combined approach.

The following table shows the results of a study of improvements in “health” and increases in costs, due to the introduction of these two programmes aimed at reducing cholesterol levels.

However, some of the data in columns (1) through (6) are missing.

Table: Costs and benefits of strategies to reduce cholesterol

Strategy (1) (2) (3) (4) (5) (6)
Total cost (£) Total Benefit (discounted QALYs) AIDed cost (£) AIDed Benefit (discounted QALYs) Average cost per discounted QALY Marginal cost per discounted QALY
No action 0 0 0 0 N/A N/A
Population intervention 6,000,000 600 6,000,000
Combined approach 18,000,000 900 300

i) What figures are missing from the empty boxes (indicated by a-d) in:
a. Column 3?
b. Column 4?
c. Column 5 (two answers)?
d. Column 6 (two answers)?

ii) Explain the measure of health outcome (i.e. QALYs) used in the table. What alternative measures of outcome could have been used in this scenario? (approximately 500 words)
(20% of total mark)
Question 3

Should equity in health care be defined in terms of use, access or health? Explain/ justify your answer. (approximately 500 words)



Question 4

In what ways does evaluation of public health initiatives challenge conventional health economics approaches? (Describe the principles of economic evaluation first before applying them to more complex, public health interventions and outlining the challenges). (approximately 1000 words)


Question 5

In what ways do social value judgements challenge conventional health economics approaches? (Describe the principles of economic evaluation first before considering how societal values may challenge these).


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