Health Care Systems

There has been much debate about the role of market systems and private systems in the health care field. Traditional microeconomic theory suggests that market systems are ideally suited to holding down costs, building efficiencies, and providing the highest quality of service for the consumer. Worldwide, the United States has probably the most market based health care system of any developed country. There is little doubt that the American market based system offers the best health care available in the world to those who can afford to pay for their health insurance. However, despite spending a significantly higher percentage of its Gross Domestic Product (GNP) on health care than any other developed nation (McConnell Brue, p. 454), over 45 million Americans are uninsured and do not have access to routine health care (Census Bureau). This paper will use the debate over health care within the United States as a laboratory to show that the only viable way to bridge the failures of public and market system provision of health care is a private system which is a hybrid of both.

Before we can analyze the health care imbroglio, we will first undertake an overview of market and private systems. The market system depends on private individuals and firms to own the property resources of an economy. Market systems depend on two freedoms: freedom of enterprise, which ensures that entrepreneurs and businesses are free to obtain and utilize the economic resources they need to

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privy to, are bad risks. Because insurance companies know that this can happen, they "allow for this in setting rates. That makes insurance even less attractive to the good risks, reducing even further the number of good risks who buy it" (Friedman). So what is the solution to this dilemma? In many countries, the fact that market-based health care provision can lead to market failures and a lack of health insurance for many consumers has led to government intervention in the health care field. These interventions have taken various different forms, spanning from the regulation of private health insurance firms to the government stepping in and providing public health insurance. Governments seeking to provide public health insurance can choose from a variety of options, including creating a government owned and operated insurance provider, guaranteeing health care payments to private insurers, or lastly assuming the responsibility directly by providing health care through a government owned and operated hospital system (Harper, p. 16). Health care provision is important because it has significant effects on the rest of a countries economy. A United Nations study concluded that "It is possible to achieve gains in expendit

Category: Medical - H