Economic Theory of Health Care

The economic theory of health care views health services as goods and services that people value and demand, much like other products. Since health care often involves unpredictable needs and existing inequalities, markets for health care don't always function perfectly. Factors like insurance, government policies, and information asymmetry influence how health care is produced and consumed. The goal is to allocate resources efficiently—maximizing health benefits while minimizing costs—while addressing issues like access and quality. This theory helps explain why health care systems vary globally and guides policies to improve health outcomes efficiently and fairly.