Health Economics Glossary

A market situation where individuals with higher health risks are more likely to purchase insurance, leading to a sicker-than-average insured pool and rising premiums.

A payment model where providers receive a fixed amount per enrolled patient per period, regardless of the volume or type of services rendered.

An economic evaluation that measures both costs and benefits in monetary terms, enabling comparison of net value across different programs and sectors.

A form of economic evaluation comparing the costs and health outcomes of alternative interventions, typically expressed as cost per QALY gained.

A measure of overall disease burden quantified as the number of years of healthy life lost due to illness, disability, or premature death.

The responsiveness of the quantity of healthcare demanded to changes in its price. Healthcare is generally inelastic, especially for urgent and life-saving services.

A system classifying hospital cases into groups expected to have similar resource consumption, used as a basis for prospective hospital payment.

A cost or benefit arising from a health activity that affects parties not directly involved in the activity, such as herd immunity from vaccination.

A payment model where providers are reimbursed for each individual service or procedure performed, which can incentivize higher volumes of care.

A comprehensive research program measuring the impact of diseases, injuries, and risk factors worldwide, primarily using DALYs as its summary metric.

Michael Grossman's 1972 economic model of health demand that treats health as a durable capital stock that individuals invest in and that depreciates with age.

The principle that all people should have a fair opportunity to attain their full health potential and that no one should be disadvantaged from achieving this potential.

A systematic process for evaluating the clinical effectiveness, cost-effectiveness, and broader impact of health technologies to inform policy and reimbursement decisions.

The ratio of the change in costs to the change in health outcomes between two alternative interventions, representing the additional cost per additional health unit gained.

A situation where one party in a transaction (typically the physician) possesses significantly more relevant information than the other (typically the patient).

The tendency for insured individuals to use more healthcare services because insurance shields them from the full cost of care.

The value of the best alternative use of resources that is forgone when a particular choice is made, central to all economic evaluation in healthcare.

A reimbursement method where the payment rate is set in advance based on predetermined criteria, rather than being based on actual costs incurred.

A generic measure of health outcomes that combines length of life and quality of life, where one QALY equals one year of life in perfect health.

A group of individuals whose health costs are combined for the purpose of calculating insurance premiums. Larger and more diverse pools tend to produce more stable and lower premiums.

A healthcare financing model in which a single public entity acts as the sole insurer, collecting funds (usually through taxes) and paying for all covered health services.

Non-medical factors that influence health outcomes, including income, education, employment, housing, food security, and social inclusion.

The phenomenon where healthcare providers use their informational advantage to generate demand for their own services beyond what is clinically necessary.

A health system goal where all people receive needed health services of sufficient quality without experiencing financial hardship.

A healthcare delivery model in which providers are rewarded based on patient health outcomes rather than the volume of services delivered.