Question

Based on the role of state in economic policy and planning. Please provide the economic rationale for the role of state in public health. Can private sector provide health services efficiently? Why or Why not?

Answer 1

The public health system must be managed and planned in the most appropriate and rational manner. The private sector can not manage the public health system efficiently.

The public health system has positive externalities. Thus private demand for health would be smaller than the socially efficient level of demand. Thus, the government has to plan and manage the public health system.

Further, many people in the country can not afford the health care system, thus government has to provide the health care system to such people as well.

Thus, the private sector can meet the needs of a certain section of society, Further, the cost of the health care system would rise incredibly if there is rise in the private health care providers. apart from this, positive externalities are not taken into account by these private health care providers. Thus, government intervention is required in the public health care system.