On February 24th, Prof. Joachim Marti (Unisanté) delivered the second distinguished lecture at of The Sense on the theme “When Economics Meets Health (and Vice Versa)”. Professor Marti’s research hasd direct impact on the study areas of The Sense, providing a more objective view of health economics and both micro- and macro-scale factors contributing to the introduction of new treatments into the healthcare system.
What is meant by health economics?
Economics aims at the optimal allocation of limited resources to meet unlimited needs. This issue is particularly relevant in the field of health, where trade-offs are necessary at various levels (individuals, healthcare providers, government, etc.). Professor Marti’s research aims to clarify these trade-offs and understand the behaviors and decisions of actors within the healthcare system, focusing on three main areas: the costs and benefits of treatments and health policies, the economic analysis of decision-making among different stakeholders, and the efficiency and fairness of resource allocation.
Healthcare: A Market Like Any Other?
Health and healthcare are unique objects that possess distinct characteristics. Economists have been studying them since the mid-20th century, primarily due to the following peculiarities:
- The ubiquity of risk and uncertainty: For example, the risk of falling ill, the financial consequences of illness, the impact on quality of life, and uncertainty regarding treatment effectiveness.
- Asymmetry of information: Information is not equally distributed among the actors in the system. For instance, doctors have more information about treatment effectiveness than patients; citizens have more information about their health and health behaviors than insurers.
- Presence of externalities: Goods or services whose use generates damage (or benefit) without proper compensation. The price of such goods or services does not reflect the social cost (or benefit) of their utilization, necessitating intervention by the state. For instance, the price of a pack of cigarettes does not consider the negative impacts of passive smoking, warranting an economic justification for taxing this negative externality. Another example is the social benefits of a vaccine (preventing the spread of a disease), which justifies reducing its price (e.g., through subsidies).
- Bounded rationality: The existence of a perfectly rational consumer is unrealistic. Decision-making capacity is impacted by cognitive biases, lack of information, etc.
The government intervenes regularly in the healthcare domain to compensate for market failures caused by these specificities. Indeed, a completely free market cannot function effectively, as it would lead to underutilization of healthcare services and greater inequity of access. For more information on Professor Marti’s projects and studies, you can refer to the Unisanté website, as well as the new HEC-FBM-Unisanté platform for health economics, behaviors, and policies, LCHE.