The value of Health Economics is indispensable in a society. Its scarcity is a primary concern especially among countries without ample resources to provide healthcare (Culyer, 1989). Another major issue that makes Health Economics important is the mode of distribution. There have been situations showing lack of logistic strategies that effectively deliver health to major recipients. Finally, the sustenance of supply and allocation of health care makes Health Economics valuable. In ensuring both the necessities are satisfied, costs have to be incurred consistently. It is the spending capacity of countries that decide supply and distribution of healthcare.
According to Fuchs (1996, pp.1-24), the level of expenditures incurred by governments in healthcare delivery has increased precipitously. The sudden rise in cost can be attributed to intellectual advances, greater availability of information, and the ever-increasing demand for such service. The dedication of government spending to health care services results to various economic sacrifices. Aside from health, there are pressing needs that the society needs to acquire. Concentration in healthcare looms problems such as forging quality education and the generation of sustainable income through investments and government spending.
Direct costs of delivering healthcare involve purchase of medicines, establishments of medical institutions, and hiring of personnel knowledgeable of health services. Other costs also include research and development, which at present is the most critical item being propagated by governments. Moreover, the government needs to incur indirect costs such as building of infrastructures to ensure that transportation and communication improves healthcare delivery. Furthermore, the marginal cost of health care needs to be evaluated. Unlike the total cost, which is simply an aggregate, marginal cost