Health Economics

Health economics applies the principles and methods of economics to the organisation, financing and delivery of health services. It addresses how scarce resources are allocated to produce and distribute health-related goods and services, and how those choices affect population health and equity. At its core lie the concepts of scarcity, opportunity cost and marginal analysis: every additional investment in one service entails foregoing benefits elsewhere. Economic evaluation tools—cost–effectiveness, cost–utility and cost–benefit analyses—compare interventions by measuring both inputs (costs) and outcomes (health gains), guiding resource allocation toward maximum health return. Complementing evaluation, health financing examines mechanisms for revenue collection, risk pooling and purchasing to secure universal access, while stewardship focuses on regulation and market failures that distort supply and demand (for example, information asymmetries and externalities). Growing pressures from ageing populations, chronic disease prevalence and technological advances heighten the need for rigorous economic assessment to inform policy, prioritise high-value care and ensure sustainable, equitable health systems.

Research from Nature Portfolio

An analysis of a conditional cash transfer programme among over 22 million low-income Brazilians demonstrated that targeted social support reduced AIDS incidence by 41% and mortality by 39%, with the greatest effects in those of extremely low income. These findings highlight how anti-poverty measures can yield substantial HIV-related health returns by alleviating economic barriers to care and prevention.

A retrospective study of Saudi Arabian hospital records quantified the direct cost of COVID-19 admissions across severity levels. Mean per-case costs were US $2 003 for mild disease, $14 545 for severe and $20 188 for critical illness, with comorbidities driving higher expenditure on beds, diagnostics and therapeutics. Such bottom-up costing provides critical data for pandemic preparedness and budgeting in middle-income settings.

An extrapolation of South Korean claims data estimated lifetime medical costs for stroke subtypes: ischaemic stroke incurred approximately US $50 551 in national insurance payments and $11 666 in patient copayments, while haemorrhagic stroke costs reached $71 406 and $14 921 respectively. By integrating survival projections with reimbursement rates, the study offers a comprehensive view of long-term economic burden across stroke phenotypes.

Health Economics publication trend

The graph below shows the total number of articles in health economics across all publications each year (not limited to Nature Index journals).

Technical terms

Opportunity cost: The health benefits forgone by choosing one intervention or resource allocation over the next best alternative.

Incremental cost-effectiveness ratio (ICER): The additional cost required to achieve one extra unit of health benefit (e.g. per quality-adjusted life year) when comparing two interventions.

Quality-adjusted life year (QALY): A composite outcome measure that adjusts life-years gained by a utility weight reflecting health-related quality of life on a scale from 0 (death) to 1 (perfect health).

Direct medical costs: Expenditures for healthcare services and goods, including hospitalisation, diagnostics, medications and professional fees, incurred by health systems or patients.

Informal care: Unpaid support provided by family or friends to individuals with health or functional needs, typically valued by forgone earnings or replacement-cost methods.

Societal perspective: An economic evaluation viewpoint that includes all costs and benefits to society, encompassing direct medical costs, indirect costs such as productivity losses, and informal care contributions.

References

1. Income determines the impact of cash transfers on HIV/AIDS: cohort study of 22.7 million Brazilians. Nature Communications (2024).
2. Estimated cost of treating hospitalized COVID-19 patients in Saudi Arabia. Scientific Reports (2022).
3. Lifetime risks and health impacts of hemorrhagic and ischemic stroke in South Korea. Scientific Reports (2020).
4. Trends in direct health care costs among US adults with atherosclerotic cardiovascular disease with and without diabetes. Cardiovascular Diabetology (2024).
5. Costs of diabetes complications: hospital-based care and absence from work for 392,200 people with type 2 diabetes and matched control participants in Sweden. Diabetologia (2020).
6. The Economic Value of Non-professional Care: A Europe-Wide Analysis. International Journal of Health Policy and Management (2021).
7. Health Economics.