Introduction to the Economics of Health and Health Care

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Course TypeCourse CodeNo. Of Credits
Foundation ElectiveSLS2EC2204

Semester and Year Offered: 3/4 Semester, 2nd Year

Course Coordinator and Team: Dipa Sinha

Email of course coordinator: dipa[at]aud[dot]ac[dot]in


Aim: The course is aimed to apply principles of economics in the areas of public health, health and health care. It would also help students identify the limitations of neo-classical approach and develop a heterodox perspective in the study of health. Students would be exposed to the most advanced fields of research in economics which have relevance to health and survival of the millions under-privileged people of the developing world.

Course Outcomes:

  1. Analyse market failures in health and examine various models in economic literature that are relevant to explaining health seeking behaviour and health provision
  2. Compare the different models of provision of health care and health financing across the world
  3. Critique health policy in India from Independence to contemporary times
  4. Apply economic theory to evaluate policy responses to health challenges

Brief description of modules/ Main modules:

A. Introduction to Public Health, Health and Health Economics: As an introductory module, this would expose students to basic concepts of public health, health systems and determinants of health. While laying out the broad contours of health economics, this module would expose students with Social Science approach to Health.

  1. Scope of health economics
  2. Economic growth, development and health outcomes
  3. Historical perspective on health and economic development
  4. Health and health care
  5. Core principles of Public Health
  6. Social determinants of health
  7. Social Science approaches to health

B. Microeconomics and health care: In this module students would be exposed to market failures in the context of health. Important microeconomic models of health care would be studied here. Structure and issues of health insurance would be studied here.

  1. Application of consumer theory
  2. Production of health and health care
  3. General equilibrium: Pareto Optimality
  4. Imperfect market for health and health care
  5. Health Insurance: Principal-agent problem, moral Hazards, adverse selection

C. Health Financing: The module on health financing would be based on the understanding on role of state in health and health care. Different forms of health financing would be studied, and roles of agents including state, market and individuals would be analysed here. Major emphasis would be put on Out-of-pocket spending on health and its impact on equality and access. Health care and financing systems would be studied from historical perspective with special emphasis on developing countries.

  1. State vis-à-vis market: Public Good, Merit Good
  2. Different forms of Financing: role of state
  3. Private Out-of-pocket expenditure and its implications
  4. Health financing in India

D, Health & Equity: Equity is a key concept in understanding of health and public health. In this module we would study the various dimensions of equity and its determinants. Various measures of equity would be studied.

  1. Efficiency, Effectiveness and Equity
  2. Explanations of inequality: Social Cohesion and Social Capital
  3. Measurement of inequality

E, Health Policy and Planning: In this module we would study global and Indian experience of health policy making from a historical perspective with special emphasis on key landmarks like Alma Ata declaration, Health Sector Reforms and WTO. Emphasis would be to study health sector reforms in India.

  1. Global experience
  2. Indian experience
  3. Health sector reforms
  4. Primary Health Care Approach and HSR
  5. Universal Health Coverage- the emergence of a new paradigm

Assessment Details with weights:

Term paper (40%), Class Test (40%) and Group Presentation (20%)

In the term paper, the emphasis would be on developing the ability to formulate a small research question within a given broad topic, developing an attitude of independent thinking and learning how to assimilate material from multiple sources to present a coherent argument.

The end-semester examination would examine the students for their understanding of methods and approaches taught and their application to the range of health and health policy issues

The group presentation will be based on a small field research such as visiting a government hospital/mohalla clinic and interviewing a few people on different issues such as hospital finances, out of pocket expenditure, human resource issues, and so on.

Reading List:

  1. AK Shiva Kumar, Chen LC, Choudhury M, et al. Financing health care for all: challenges and opportunities. Lancet 2011; 377: 668-679.
  2. Arrow, K. J. (1963), “Uncertainty and the Welfare Economics of Medical Care”, The American Economic Review, 43(5), pp. 941-973.
  3. Banerjee, D. (1985), Health and Family Planning Services in India: An Epidemiological Socio-cultural, and Political Analysis and a Perspective, Lok Prakash, New Delhi.
  4. Baru, R., 1998. Private health care in India. Social characteristics and trends, New Delhi: Sage Publications.
  5. Berman, P. and M. E. Khan (edited) (1988), Paying for India’s Health Care, Sage, New Delhi.
  6. Dréze J, Sen A. An uncertain glory: India and its contradictions. Princeton, NJ: Princeton University Press, 2013.
  7. Farmer, P. Pathologies of Power UCP 2003. Chapters 5 and 6.
  8. Faulland S (2008) The Economics of Health and Health Care, 5th Edition.
  9. Gangolli, L., Duggal, R. & Shukla, A. eds., 2005. Review of Healthcare in India, Mumbai: Centre for Enquiry into Health and Allied Themes.
  10. GOI (2002). National Health Policy. Dept. of Health, Ministry of Health and Family Welfare, New Delhi.
  11. Government of India (2005), Report of National Commission on Macroeconomics and Health, Ministry of Health and Family Welfare, New Delhi
  12. Government of India (2009), National Health Accounts, India, National Health Accounts Cell, Ministry of Health and Family Welfare, New Delhi.
  13. Health for All - Declaration of Alma Ata.
  14. Marmot M, et all. Closing the gap in a generation: Health equity through action on the social determinants of health. 2009. WHO and Commission on Social Determinants of Health. Available on the WHO website
  15. Mckewon, T. and R. G. Record (1962), “Reasons for the Decline of Mortality in England and Wales during the Nineteenth Century”, Population Studies, 16(2), pp. 94-122.
  16. Mooney G (2009): Challenging Health Economics, Oxford University Press, New York
  17. Musgrove, P. (1996), Public and Private roles in Health: Theory of financing patterns, Health Nutrition and Population, Discussion paper, The World Bank.
  18. People’s Health Movement (2011), Global Health Watch III & IV, Z-books, Landon.
  19. Rao, Sujatha, Selvaraju, S., Somil Nagpal and S. Sakthivel 2005, Financing of Health in India, ed. In Government of India, Ministry of Health and Family Welfare, NCMH Background Papers-Health Systems in India: Delivery and Financing of Services.
  20. Reinhardt Uwe E. (2001). Can efficiency in health care be left to the markets?. Journal of Health Politics, Policy, and Law 26(5):967-92.
  21. Sen A. Why health equity? Health Economics 2002; 11: 659-666.
  22. Sen A. Mortality as an indicator of economic success and failure. The Economic Journal 1998; 108: 1-25.
  23. The World Bank (1993), Investing in Health, World Development Report, World Bank, Washington.
  24. World Health Organisation (2000), The World Health Report – Health Systems: Improving Performance, Geneva
  25. John B. Davis, Robert McMaster (2007). The Individual in Mainstream Health Economics: A Case of Persona Non-grata; Health Care Analysis; September 2007, Volume 15, Issue 3, pp 195-210
  26. The Handbook of Health Economics (Anthony J. Culyer and Joseph P. Newhouse, eds., Elsevier Science, 2000) is available online at


  • Relevant reports and publications available in the website of Ministry of Health and Family Welfare, Government of India and World Health Organisation