Health Care Costs and Behavior

Todd Gilmer

Economic costs are the value of resources consumed in an endeavor. Health care costs are therefore the value of resources used in the provision of health care. These resources include the professional services of health care providers, the facility resources used in providing these services in settings such as hospitals and clinics, pharmaceutical therapy, specialized health services such as radiology and pathology, and health care supplies. A more expansive definition of costs related to health care would include the time required by patients to attend therapy and the support of family caregivers, as well as the true value of pain and suffering related to treatment, less the value of improvements in health. Resources are valued at their opportunity cost, which is the value of the activity forgone in order to employ the resource. In a competitive market, where suppliers and consumers freely trade their goods and services, opportunity costs may ...

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