Glossary of Terms Used in Health
Economics,and Pharmacoeconomic and Quality-of-Life Analyses
Term Definition/description Health Economics Allocative efficiency An allocationof resources such thar no change in spending (Pareto priorities could improve the welfare of one person without optimality/efliciency) reducing the welfare of another Cap The maximum level of expenditure reimbursable by a plan in a speciied time periodcg.1 month Capitation A prospective payment to a healtheare provider hased n an actuarial projection of expected drug or medical service utilisation rates for a pre-determined patient population Coinsurance A percenagepaymcnt made by the patientgenrally in the 10 to 20%range. Coinsurance,usually coupled with deductiblesis commonly found in indemnity insurance plans and PPOs but not in HMOs Conflict of interest This can arise for a physician wheni too few physicians
may put the other at greater individual risk for incurring patient expensesiifinancial penalties are greater than withhold amounts or ii the physician's income is totally dependent on capitationand the physician is at risk for ancillary or consultation expenses or scrvices not covered by the managed-care organisation
Copayment (copay, user charge;part charge) Deductible excess
A fixed dollar payment is made by the patient to the provider at the time of service
A fixed dollar amount that the patient must pay before reimbursement begins in most indemnity plans there is no separate deductible for drugs A partial confederacy of European states,inchuding the signatories of the Treaty of Rome 1956;a single market now exists among the member states Fairness in the allocation of resources or treatments arnong different individuals or groups
Europcan Union (formerly Economic Community,EC Equity
Gross Domestic Product(GDP)
Total market value of all final goods and services produced in an economy during some time period (usually
a year Gross National Product The market vale of allfinal goods and scrvices produced GNP) in a given time period (usually one yearby the nationals of a country residing cither in the country or abroad Health maintenunce Managed care plan that offer prepaid comprchensive organisation (HMO) healthcarc coverage,minimal copay and coinsurancc, and usually case management to those enroled in the plan HMO:independent HMO that contracts directly with physicians in practice association independent practiccs or with one or several multispecialty IPAmodel group medical practices MOnon-IPAde staodelor group moeHMO that hires salaried physicinns to provide healthcare serviccs physicians sce only HMO paticnts Managed care An organised system ofhealthcare deivery designed to control costs and quality,by such means as mandatory drug formulary listspreadmission screening,case nanagement cic. Participating providers physicians dntis,phamacitsgenerly agrcc to accept discounted payment and to abide by the plan's cosi and quality control mcasures Monopsony A market situation when there is a single buyer eg. government purchase of dnigs Oligopsony Amarket siuation when thcre arc a relatively small number of large buyers that account for an important share of total purchases Orgarisation of An intemational organisation ofdeveloped countries, Economic Cooperation Which produces intemational statistics on healtheare and Devclopment Systems in member countries and provides a forum for OECD research and discussion about economic issues Pharmacy benefit Companies that broker deals betwoo