Overview
In a very real sense, the market for health products and services is a market like any other, and economic analysis can be applied to it. Also, like any market, it has its own pecularities that need to be considered.
For the purposes of this analysis, health care products and services includes products that one could buy at the pharmacy, or at a store (online) and includes doctors care. It will exclude insurance as a health care, which is treated separately. (see insurance for more information)
Pricing and Elasticity
One of the unique features of health care is the price sensitivity it exhibits. Health care products can be impacted by a sense of urgency on the part of the consumer. That is, if the consumer is sick right now, she will likely want the remedy quickly, and less likely to want it after she has recovered.
In addition, poor health outcomes can have lasting impact on the consumer, sometimes even leading to the worst outcomes, lifelong pain or death. In these cases, price becomes a secondary concern for the consumer. This can lead to steep price sensitivity curves.
Information Asymmetry
One of the critical aspects of health care economics is the interplay of information in the market. That is, the consumers often have a problem that needs to be solved, for which they cannot diagnose. The consumer becomes reliant on their doctor to help them figure out what problems they are facing, or even if they are facing any issues.
This means that the Economics of Information can play a heavy role in the health market. In point of fact, the doctor patient relationship is one of asymmetric information which will affect the efficiency of the market. (that is, the doctor has more information than the patient, who must trust the doctor in order to receive proper care)