why do governments intervene in health care services?

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Expert Solution

There are several situations where market forces, left to themselves, will be unsuccessful to maximize social & economic welfare &, as a consequence, there’ll be a requirement for governmental intervention;

-there are efficacy, equity & ethical arguments for state intervention, although since state intervention has costs and benefits none of them is an adequate reason for intervention;

-the efficacy arguments for state intervention include - the prevalence of public goods, externalities, imperfect competition & info;

-the efficacy arguments for state intervention most relevant to public services like education & healthcare are externalities, imperfect competition & info;

- imperfect info is especially essential not only as it may contribute to imperfect competition, but as it may weaken the efficient working of insurance & capital markets on which efficient provision of medical care & education depend. As a result, health insurance may not be obtainable at any price, for instance, for high cost medical disorders of uncertain likelihood;

-there are a variety of equity arguments for state intervention including horizontal & vertical equity & social inclusion & intergenerational parity.

-Cash benefits are to be favored to benefits in kind as a way of redistribution of income until & unless there are merit good, political economy or access reasons for utilizing benefits in kind;

-ethical concerns may also lead to state intervention. For ideological reasons , some persons may be opposed to market provision of medical care or to the participation of profit-making providers.

Rahul Sunny answered 1 year ago

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