The conceptual, theoretical and empirical challenges in health economics are wideranging. Health care decision-making is complex, there are multiple sources of market failure, and welfare assessment is by no means straightforward. While the various administrative and survey health databases are extensive, there are often significant deficiencies and gaps that have limited the scope of research. Health economics in Australia, since the pioneering work of Deeble and Scotton, has been inextricably tied to health policy. The Australian health care system is a complex mix of public-sector and private-sector involvement in financing and delivery of services, of substantial variations in the funding and organisation of services within a universal framework, and of frequent, incremental policy changes. As a recent Senate inquiry noted:
[The] persistent problem with assessing proposals for reform is the lack of appropriate data to determine whether reforms are likely to achieve their objectives … it was only possible to make a broad qualitative judgement of whether reforms would enhance equity and efficiency. [Senate Community Affairs References Committee 2000:196]
To date, there have been significant Australian contributions to health economics research on the demand for private health insurance, comparative efficiency of private and public provision, welfare assessment, and economic evaluation. The academic base for health economics has grown strongly – currently about half of the members of the Australian Health Economics Society are working from academic institutions. Nonetheless, the existing health economics capacity is spread thinly. Several important topics, such as labour markets and workforce issues, or equity in financing and access to care, have received little or no attention. In other significant policy areas, such as private health insurance, and the relationship between insurance and utilisation, although there are some important contributions, there is not a sustained research program, and frequent changes in policy settings limit the policy usefulness of what research has been done.The low levels and short-term nature of research funding have made it almost impossible for a critical mass of researchers to focus on and develop a specific area. Although there have been repeated recommendations for a national investment in health services and health economics research, so far there has been little by way of implementation.
Economics ways of thinking have transferred to health policy, much more so than was the case in the 1980s. But these ideas have not been backed up by in-depth and rigorous analysis, either as a precursor to policy development or as an evaluation of its implementation. For this to be achieved means a wider and more ambitious research agenda, supported by long-term programmatic funding for Australian health economics.
Arrow, K.J. 1963. Uncertainty and the welfare economics of medical care. American Economic Review 53:941–73.
AIHW. 2001. Expenditures on Health Services for Aboriginal and Torres Strait Islander People 1998–99. Canberra: Australian Institute of Health and Welfare.