Economic Good For Healthcare

Economic good is defined as any good that is scarce relative to our wants for it, and which also has an opportunity cost associated with it. Economic good can also be characterised by the fact that it has a value, so people are willing to pay for it. Thus, if we look at this definition of an economic good, it seems that healthcare fits it rather well: the resources used for production of healthcare, such as human resources and capital, are finite; our wants of healthcare have no bounds – no healthcare system in the world has yet achieved the level where it can satisfy all wants for healthcare; and of course, healthcare has a great value for us.

Yet, even before the days when Kenneth Arrow gave rise to the term health economics in his article

Ultimately, stating that healthcare is an economic good like any other implies a change to the way that we think about healthcare on several levels: all the way from the entire microeconomic level, down to the solely individual level – our own attitude to healthcare as patients or consumers.

UK’s NHS, from the moment it was founded and up until now, clearly reflects a view of healthcare as a social or common good, which is defined, in economic sense, as a good that could be delivered as private good, but is delivered instead by the government, for various reasons (usually social policy). Therefore, if we put at the core of our attitude to healthcare the fact that it is a social good, this implies that everybody has to have equal access to it in order to achieve equitable and socially optimum allocation of resources. As a result, as soon as we start thinking of healthcare as an economic good like any other, then there is no more moral/ philosophical argument present, that everyone has to have equal access to healthcare, which is in line with the social attitude towards the majority of economic

Particularly in the UK, due to the long history of NHS with the motto “free, from the cradle to the grave”, there is a common mind-set that healthcare is completely free. For a long time, the treatment prescribed by the doctor to the patient normally incurs zero cost both to patient and the doctor, as it is paid out of the state budget. As a result, patients and doctors usually have little or no awareness of the costs incurred by the treatments. Thus, thinking of healthcare as an economic good like any other would make consumers and doctors more conscious of medical price tags. This could result in the increase of the burden of the decision of whether or not to bear the cost of treatment on the patient, just like with any other economic good, leading to increased patient cost