Health of a nation or the residence of that nation greatly depends not only on the geographic location but also on the legal and economic stabilises of the nation. Taking up to roughly 10% in GDP, the health care industry have a major impact on the economy of a nation. As a result, it becomes the indispensable attention of all governments.
Health economics is a branch of economics about issues relevant to scarcity in the allocation of health and health care. There are four factors that are important to Health Economics: Government Intervention, Uncertainty, Asymmetric Knowledge, and Externalises.
Governments tend to heavily regulate the Health care industry. It also tends to be the largest payer in the market. Uncertainty is intrinsic to health, both in financial concerns and patient outcomes. The knowledge gap between a physician and a patient creates a situation of distinct advantage for the physician, which is called as Asymmetric Knowledge. Last but not least, there are many effects that happen between two parties without monetary compensation, which is called as externalises, within health care, ranging from catching a cold from someone to practicing safe sex.

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