What Is Health Economics and Why Is It Important?

Written by Coursera Staff • Updated on

Health economics is the examination of how to make health care more equitable, accessible, and affordable for all. Here’s what exactly that means and why it matters.

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Health care is one of the most important aspects of human life and well-being. The health care sector is consistently expanding in the UK, seeing over a 10 per cent increase in expenditures from 2019 to 2020 [1]. The UK has public health care, known as the NHS, which contributes to the over £250 billion spent by the UK government on health care. 

Health economics seeks to examine the factors that influence the industry’s costs and quality of care. The UK government has an entire sector dedicated to health economics: the Health Economics and Modelling team (HEMT), which is part of Public Health England (PHE). This team researches how patients, the public health sector, health care providers, private insurance companies, and the government influence how health care is distributed—and in what ways it can be improved.

Health economics examines the factors that influence the industry’s costs and quality of care. How do patients, health care providers, and the government influence health care distribution—and how can it be improved?

What is health economics?

Health economics is an applied field of study that examines and finds systems-based solutions to make health care more equitable, accessible, and affordable for all. Health economists seek to understand the role stakeholders, such as health care providers, patients, government agencies, and public organizations, play in health care spending.

Health economists are curious about what affects health outcomes. In their research, they’ll ask questions like:

  • How do we put a value on health?

  • What factors influence health besides health care?

  • What influences the supply and demand of health care? 

  • What are the behaviours of health care providers versus those seeking care?

  • What are some alternative approaches to health care production and delivery?

  • How can we improve how we plan, budget, and monitor health care?

Example of health economics in the real world

Health economics can be used to solve real-world problems and model the outcomes of potential solutions. Take the concept of resource allocation.

In times of high demand, such as COVID-19, the resources of the NHS become stretched thinly and funding often cannot cover the full expenses needed to keep up with patient needs.

In times like this, health economists will look at data, evaluate ongoing needs, and develop solutions that can be used to help the UK government allocate health care resources and funding.

Quality over quantity

Value-based care focuses on health care being delivered based on quality over quantity. Data drive it because providers report specific metrics like hospital or clinic readmissions, patient engagement, and more, to demonstrate health improvement [5].

The Value-Based Care specialization from the University of Houston provides an applied learning experience to deeply understand this health economics area.


Why is health economics important?

Health economics is important because it focuses on how the economic behaviour of stakeholders and recipients affects the quality and cost of medical care. It includes how people pay for care, how those payments are processed, and how to restructure and improve health systems worldwide. Tackling any systemic issue at the root cause can prevent the same problems from arising again.

In examining the questions above, health economists address global issues, such as migration and displacement, climate change, pandemics and vaccine access, disorders, obesity, and more. They apply economic theories to inform the public and private sectors on cost-effective solutions to improve equity in health care.

For example, a health economist might research disparities in the quality of health and income in West Africa by evaluating the price of health care and insurance in the region. Potential solutions include employing digital technologies to provide health care directly through a mobile phone or laptop. 

Similar to public health and population health, approaching society’s health and well-being from a bird’s-eye macro perspective and drilling down to research specific populations can have a positive impact. Health economics can deliver insights that inform solutions to some of the world’s most pressing health care and well-being issues.

Who should study health economics?

Understanding how economic behaviour factors into health and health care decisions can benefit anyone interested in this field. However, the following groups of individuals may benefit most from the study of health economics:

  • Medical providers: Doctors, nurses, and assistants can evaluate new treatments, technologies, and services to determine ways to deliver value-based care. Medical providers benefit from understanding the economics behind these developments.

  • Administrators: Health care administrators manage financial metrics for health care providers. Learning the intricacies of health care economics can provide the necessary context as they liaise with insurance providers and use new technologies to process payments.

  • Policymakers or public health officials: Those in charge of policy decisions at the provincial, federal, or international levels benefit from understanding the economic relationship between stakeholders and the general public.

Learn health economics with Coursera

Dive into the exciting field of health economics and contribute to the future of health care. Consider enrolling in The Economics of Health Care Delivery from the University of Pennsylvania as part of the Business of Health Care specialization offered in partnership with Wharton and Penn Medicine. You’ll learn from experts in business acumen, health care management, and health care policy to develop the skills you’ll need to successfully navigate the quickly evolving landscape of this fast-growing field.

Article sources


Office for National Statistics. “Health care system, https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthcaresystem.” Accessed March 29, 2024.

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