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Government's Role In Healthcare Essay

2331 words - 10 pages

Table of Contents
1. Introduction………………………………………………………………………….....12
2. Externalities………………………………………………………………………..…..13
3. Asymmetric Information………………………………………………………………..15
4. Government’s role in correcting Market Failures……………………………………15
5. Government’s role in Health Care………………………………………………….…16
6. Government Expenditure and Redistribution………………………………………..16
7. Conclusion……………………………………………………………………………….17
8. Reference……………………………………………………………………………..…18

1. Introduction
I would believe that health care should be viewed as a public good because these goods are non-rival in that consumption of the public health policy by one individual does not reduce the potential for others to consume the goods. The amount consumed by consumers is generally the same, but the price paid for that good by a given consumer may vary. With a private good in a free market the price and amount available is determined by the willingness of the consumer to consume. The price is then constant for all consumers but the amount each consumer uses may vary. If we look at health care I would argue, in general terms, that the health care demand of a general population is constant (Phelps,1995).
That is, in general all people require the same amount of health care. Of course this is not true in absolute terms as illness and disease may require some individuals to consume more, but as whole I feel this is true. This is much like police protection, which is considered a public good. If an individual is robbed they may consume more police protection, but in general society as whole consumes equally (Bastasch, 2012).
For many decades and throughout the world, government has been deeply involved in the organisation, financing, and delivery of health care services. We usually take this strong involvement for granted, and sometimes even equate a country's health care system with the role taken by its government. This is unfortunate because the foundation and extent of government involvement are predicated on certain key ethical issues. One's take on the particulars of these issues drive one's views of when and how much government should intervene in the market place (Smith & Stark, 2012).
Government has the power to influence any number of aspects of health care strongly. It can, for instance, control the number of providers as well as the kinds of services they deliver; set prices and the types and even quality of services that can be provided, particularly when public resources are involved; and have a strong influence on the introduction and diffusion of new products and technologies. One of the most important roles of government is the collecting of taxes, using the revenues to support further regulation of the sector, as well as to finance the distribution of services to those it deems most fit to receive them most notably the poor, the elderly and veterans (Phelps, 1995).

2. Externalities
For the vast majority of goods and services, including many personal health...

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