Economics has what can be referred to as a “gold standard” of resource allocation mechanisms—the perfectly competitive market, which has the following characteristics. First, there would be many buyers and sellers with no single economic agent influencing the exchange of goods among market participants. Second, it is a homogeneous or standardized product. For example, goods that individual producers cannot alter or differentiate to collect a higher price. Third, there are no barriers to movement of firms into or out of the market. Fourth, there is perfect information about market conditions that is available to all market participants; and lastly, economics is a fully defined system of property rights in which ownership of all products and productive resources is assigned.
In economic theory, the law of supply and demand is considered one of the fundamental principles governing an economy. It is described as the state where as supply increases the price will tend to drop or vice versa, and as demand increases the price will tend to increase or vice versa. Basically this is a principle that most people intuitively grasp regarding the relationship of goods and services against the demand for those goods and services. When supply and demand are in balance, the economy is said to be in equilibrium between price and quantity.
Health can indeed be regarded as a fundamental commodity that is essential to a person’s well being, leading to a demand for improvements in it. Health does have characteristics that more conventional goods have. It can be manufactured; it is wanted and people are willing to pay for improvements in it. However, its relationship with the demand for health care is not one-to-one.
In the context of ordinary goods and services, economics distinguishes between a want, which is the desire to consume something, and effective demand, which is a want backed up by the willingness and ability to pay for it. It is effective demand that is the determinant of resource allocation in market, rather than wants. But in the context of health care, the issue is more complicated than this, because many people believe that what matters in health care is not wants or demands, but needs. Health economists generally interpret a health care need as the capacity to benefit from it. Not all wants are needs and vice versa. For example, a person may want nutrition supplements, even though these will not produce any health improvements for them; or they may not want a visit to the dentist even if it would improve their oral health.
The conclusion from this is that the demand for health care can be analyzed as if it were any good or service, but it has peculiarities that may mean that the usual assumptions about the resource allocation effects of markets do not hold. Moreover, it may well be that people wish resource allocation to be based on the demand for health or the need for health care, neither of which can be provided in a conventional market.
The supply side of the market is analyzed in economics in two separate but related ways. One is related to looking at how resource use, costs and outputs are related to each other within a firm. Others include issues such as economies of scale are there any cost savings through having larger general practices, for example productivity – how many more surgical operations can a hospital provide if it hires an extra nurse - and factor substitution; – does allowing dental hygienists to replace dentists in undertaking certain tasks lower the costs of producing dental care?
The other way in which supply is analyzed is so called market structure which refers to how many firms are there supplying to a market and how do they behave with respect to setting prices and output and making profits. There are two well-known theoretical extremes of market structure – perfect competition and monopoly. Perfect competition has very many firms in the market so that none has any real economic power, none makes any profits, prices are as low as they can be and output is as high as can be. A monopoly has only one firm, which has great market power, makes as large profits as can be had and has higher prices and lower output. Other models are somewhere in between. The behavior of some health care organizations, such as pharmaceutical companies, providers of services like dentistry, ophthalmic services and pharmaceutical dispensing and for-profit insurance companies can relatively easily be analyzed using these models. It may be more difficult for other organizations. However, they may provide relevant insights for example regulation of the UK provider sector is increasingly guided by the use of market forces involving ‘contestability’ to provide some competitive pressures for efficiency.
Some of the essential health care factors, as well as socio-economic factors, that are important for studying our health economy affect our health economy one way or another. Education could be a factor, which affects our beliefs to what we demand for our health and our attitude towards it as well. Public transportation and infrastructure affect our accessibility for our health care facilities, which could also affect the health status of those who live in places where there are no services available. Also, the factor of political leadership could also have an effect on the way our health care services are delivered. What is essential in learning our economy’s health status would be the knowledge about the benefits of utilizing health and the accessibility or availability of the health service rendered.
There are numerous possible health risks that are associated to the health sector in the Philippines. To name a few, health risks would include the fatty streaks which may lead to fat accumulation or the beginning of atherosclerosis, smoking, alcohol and drug use, psychological stress and more. In the cycle of each person’s life, we could predict, or say, that a person has a high chance of getting ill at his extreme ages – when he is very young, and when he is very old. The reason for this is that children have a high probability for getting ill since their organ systems aren’t fully developed. And when we are old, we also have a high likelihood for getting sick because their organ systems are getting weaker. One case would be the infections and the nutritional problems that most of the children in our country have gone through. In order to solve this case, the government could plan and implement programs that would help prevent these diseases from happening, and spreading as well.

Sources:

Economics in Health for the Allied Health Sciences by Jonas D. Policarpio http://wwwnc.cdc.gov/eid/article/7/2/pdfs/70-0282.pdf http://www.science20.com/gerhard_adam/blog/economic_theory_–_supply_and_demand