Understanding Economics, Health Economics, and Natural Resources in India

ECONOMICS The word "economics" literally means "house keeping". It deals with the human relationships in the specific context of production, distribution, consumption, ownership of resources, goods and services. Economics and sociology overlap in many areas. 1

HEALTH ECONOMICS Health has a price and sickness costs. Resources are always scarce or limited and these have to be allocated to priority health problems. Health economics studies the allocation of scarce resources to different areas of health sector to achieve the results, hard choices have to be made. Economics-the science which studies human behavior as a relationship between ends and scarce means which have alternate use. Concerned with choices over how best to spend limited resources available for health care.

Natural Resources of the country India is rich in natural resources and man power (1) Agriculture (2) Forestry (3) Fisheries (4) Minerals (5) Man -power 3

(1) AGRICULTURE 44% of the national income. Provides employment to 70% population.

(2) FORESTRY 19.4% land occupied by forest. Source of timber, bamboo, canes, tendu leaves, gum, resins, tanning material, rubber, dyes, honey etc.

(3) FISHERIES Vast sea-coast. Earn foreign exchange.

(4) MINERALS Richly endowed with minerals. Bauxite, coal, copper, diamond, gold, iron ore, manganese, mica, nickel etc.

(5) MAN -POWER 16% of world s population occupying only 2.4% land. Most youngest population in world. Man-power is natural resource of country.

DEFINITION OF COST As value of resources used to produce something, including a specific health service or set of services Customer wants value of money spent on health intervention Cost effectiveness of health intervention- net gain in health divided by cost.

BENIFIT Outcome measured in term of money Products and services-improved knowledge, attitudes and practices and improvement in health status, reduction in morbidity, mortality and fertility, improvement of nutritional status. Effectiveness or effects are outcomes in natural ways that are not expressed in financial terms- number of lives saved or live years gained or QUAY gained or number of heart attack prevented or number of cases prevented due to disease due to intervention.

CLASSIFICATION OF COST BY INPUTS 1. Direct cost 2. Indirect cost 1. DIRECT COST:- resources used up in an intervention. 2. INDIRECT COST- reduction in productive potential because of an intervention. Resources-capital and recurrent cost RECURRENT COST:-used up in a course of a year usually purchased regularly. CAPITAL COST:-last longer than 1 year

CAPITAL COST 1. VEHICLES:-Bicycles, Motorcycles, Trucks 2. EQUIPMENTS:-Refrigerators, Sterilizers, manufacturing machineries, scales and other equipment with a unit price of Rs. 5000or more 3. BUILDINGS:- Space, health centers, hospitals, training school, administrative office and storage facilities. 4. TRAINING:-Non-recurrent training activities for health personnel occur only once or rarely. 5. SOCIAL MOBILIZATION:-Non-recurrent social mobilization activities-promotion publicity campaigns

RECURRENT COST 1. PERSONNEL(ALL TYPES):-Salaries of supervisors, health workers, administrators, consultants, casual labour 2. SUPPLIES:-Drugs, vaccines, syringes, small equipment (unit cost less than Rs.5000 3. VEHICLE OPERATION AND MANAGEMENT:- Petrol, diseal, lubricants, tyres, spare parts, registration and insurance. 4. BUILDING OPERATION AND MAINTENANCE:- Electricity, water, heating, fuel, telephone, telex, insurance, cleaning, painting, repair of electric supplies, appliances, plumbing, roofing etc

5.TRAINING RECURRENT:-Short in service courses. 6. SOCIAL MOBILIZATION:- Operation costs 7. OTHER OPERATING COSTS NOT INCLUDED ABOVE

OPPORTUNITY COST Rupee spent on A is rupee denied to B

AVERAGE COST Total cost of intervention divided by total number of units provided for treatment

INCREMENTAL COST Difference in cost fund between two interventions.

MARGINAL COST Additional cost or extra cost of producing one unit of output or expanding a programme

METHODS OF ECONOMIC EVALUATION 1. Cost minimization analysis (CMA) 2. Cost effectiveness analysis (CEA) 3. Cost utility analysis (CUA) 4. Cost benefit analysis (CBA)

COST MINIMIZATION ANALYSIS (CMA) Compares cost of different interventions assumed to provide equivalent benefits.

COST EFFECTIVENESS ANALYSIS (CEA) Net gain in health or reduction in disease burden from intervention in relation to cost. Measured in dollars/DALY. Benefits measured I natural units-heart attacks avoided or life years gained QALY most comprehensive indicator of CEA. Cost Cost effective ratio= Number of lives saved

COST UTILITY ANALYSIS (CUA) Used to compare costs and benefits of health technologies. Utility happiness or pleasure. Cost CUA= QALY gained or DALYs averted

Cost of A- Cost of B ICER= Effectiveness of A- Effectiveness of B

COST BENEFIT ANALYSIS (CBA) Benefits measured in monetary terms. Cost in monetary term CBA= Benefits in monetary terms Two measures to health gains-The human capital approach and willingness to pay approach

ECONOMIC LEVELS NATIONAL INCOME : Strength of a country's economy is usually expressed in terms of one of the national aggregates, such as gross national product (GNP) or gross domestic product (GDP). These aggregates measure the total volume of national economic activity at current or constant price. By dividing the GNP or GDP by the total population, one arrives at per capita GNP or GDP, which are common general purpose indicators of national wealth. 25

Per capita GNP may thus serve as a general measure of human welfare - that is, of health in a very broad sense. Many health variables are correlated with per capita GNP or GDP. Countries with a high per capita GNP are predominantly industrially developed while those with a low one are predominantly agricultural, or developing.

Gross National Income (GNI): Formerly known as GNP or Gross National Product. It is gross income generated from within the country as also net income received from abroad. It is expressed either "at current prices", at prices prevailing during the period to which the figure refers, or "at constant prices"; at prices prevailing during a fixed base period in the past, irrespective of the period to which the figures refer. 27

Thus figures 'at constant prices' discount the effect of inflation after the base period and measure the changes in real terms. Figures 'at current prices' are naturally influenced by inflation but are more useful for international comparisons for the same period.

Gross Domestic Product (GDP) - GDP is gross income generated within a country, i.e., it excludes net income received from abroad. Net National Product (NNP) - It is the GNP minus the capital we consume (e.g., equipment, machinery, etc.,) in the production process. In other words, NNP is the market value of all final goods and services after providing for depreciation. 29

Purchasing Power Parity (PPP) It is defined as the number of units of a country's currency required to buy the same amount of goods and services in the domestic market as one dollar would buy in the USA. According to the latest calculation of per capita GNP and overall GNP of the World Bank, based on PPP, India's per capita GNP in 2001 has been estimated at $ 2450 (PPP). It is the fourth largest country in terms of GNP (PPP) with about $ 2.5 trillion, preceded by the USA ($ 9.98 trn.), China (about $ 5.4 trn.) and Japan ($ 3.5 trn.) 30

Gross domestic savings - It is excess of current income over current expenditure.

Health problems in industrialized countries have passed through various evolutionary stages, each characterized by different challenges to public health and personal health care. In the initial stage, infectious diseases, malnutrition, and poor housing were combated by socio-economic improvements in combination with public health measures such as the provision of pure water supply and sewage disposal facilities. As scientific advances were made, broader control of acute bacterial and viral diseases were achieved by means of immunization and chemotherapy as well as increased health care for individuals. 32

The second evolutionary stage has been dominated by chronic diseases, particularly cardiovascular and cerebro-vascular diseases and cancer. Scientific and technological progress has produced a wide array of medical interventions for diagnosis and cure, higher levels of specialization in medical practice, and transfer of much of the care previously rendered in doctor's clinic to elaborate and expensive hospitals. The cost of health care has risen dramatically. 33

In some industrialized countries there is third stage, which might be described as social and environmental pathology. Threats to health arise not from intrinsic disorders of bodily structure and function, but from environmental hazards related to urban development and exposure to toxic substances, as well as from changes in social behavior associated with violence, alcohol, and drug abuse of epidemic proportion. 34

Industrialized countries have passed through these three stages over the course of more than a century. Developing countries, on the other hand, face the challenge of coping with all the three stages simultaneously, with just a fraction of the human and material resources available to their industrialized counterparts. Policies must be closely related to overall socio- economic development if countries with limited resources are to achieve the greatest possible benefits in health 35

POVERTY LINE The "poverty line" is defined as expenditure required for a daily Calorie intake of 2,400 per person in rural areas and 2,100 in urban areas. PER CAPITA INCOME An index of the standard of living of the people is "per capita income". SOCIAL SECURITY Social security is defined as "security that society furnishes through appropriate organization, against certain risks to which its members are exposed". The risks which social security covers in most countries are sickness, invalidity, maternity, old age and death. Social security also includes social insurance and social assistance. 36

Per capita GNI, life expectancy at birth and IMR in SEAR countries (2010) Country Per capita GNI US $ Life expectancy at birth IMR India 1,340 (7130/2021) 65.0 (70.15/2020) 48 (25.79 9/2023 ) 38 Bangladesh 640 69.0 Bhutan 1,920 67.0 44 Indonesia 2,580 69.0 27 Maldives 4,270 77.0 14 Myanmar 220 65.0 50 Nepal 490 68.0 41

Social security for Industrial workers The social security measures for industrial workers in India are contained in the following legislations: (1) Workmen's Compensation Act, 1923 (2) Central Maternity Benefit Act, 1961 (3) Employees State Insurance Act, 1948 (4) The Family Pension Scheme, 1971 38

Social security for civil servants The employees of the Central and State Government have pension, gratuity, provident fund and family pension schemes. The Central Government Health Scheme in Delhi provides comprehensive medical care to all categories of Central Government Employees. The scheme has been extended to other cities also. 39

Social security for general Public The risks of death, accident, and fire are covered by the Insurance schemes. The Life Insurance Corporation of India has many schemes for the general public. There are also public provident fund schemes and ESI schemes.

PANDEMIC Pan = all, demos = population. A disease spreads from one country to another or from one continent to another affecting large number of people all over the world simultaneously. Eg.- influenza -1918 and 1957 Cholera -1962 Acute hemorrhagic conjuctivitis-1971 SARS-2002-2003 AIDS-2002-2003 Covid-19

The health impacts of pandemics are disastrous. During the Black Death pandemic, ~30 50% of the population of Europe wiped out. In the 1980s, 35 million people died due to HIV, AIDS, and Ebola in 2014, which caused 10,600 deaths in Guinea, Sierra Leone, and Liberia in West Africa. Pandemic affects the young and economically active population disproportionately. The morbidity and mortality rates are higher for younger people as they tend to have lower immunity than the older generation. Thus, the pandemic's major impact is that it causes a significant increase in the years of life lost.

Moreover, many infectious diseases have lifelong consequences, and it can become more severe in pandemics-the medication of Zika virus has life-long chronic effects on the health of the patient. Pandemics' indirect effects on health include the depletion of resources for routine healthcare and decreased childhood immunization rates, and reduced healthcare access due to the inability to travel-During the influenza pandemic in 2009, a surge in hospital admissions due to influenza and pneumonia caused an increase in deaths due to stroke and heart attack. Therefore, it is difficult to distinguish between the deaths attributable to the pandemic and other unassociated diseases that are merely coincidental. Healthcare workers' ability to provide care is also reduced as they fall ill themselves, are required to take care of family members or children, or even the fear of catching the disease also makes them receptive.

Pandemics cause a short-term fiscal impact and a long-term economic impact on the nations around the world. Efforts to curb the pandemic include imposing quarantine, preparing health facilities, isolating infectious cases, and tracing contacts involving public health resources, human resources and implementation costs. It also involves health system expenditures to provide health facilities to infectious cases and the arrangement of consumables such as antibiotics, medical supplies, and personal protective equipment.

Pandemics can also result in declined tax revenues and increased expenditure, which causes fiscal stress, especially in lower-middle-income countries (LMICs). This economic impact severity was observed during the Ebola virus in Liberia due to the rise in public health expenditure, economic downfall, and revenue decline due to the government's inability to raise revenue because of quarantine and curfews. Economic shocks are common during pandemics due to shortage of labour because of illness, rise in mortality, and a fear-induced behaviour, disruption of transportation, closed down of workplaces, restricted trade and travel, and closed land border are reasons for the pandemic's economic slowdown.