Question

1. What are some of the ways that markets can fail in health care? How can governments intervene in health care markets to address these failures? A market that meets all the required conditions for efficient resources is a perfect economic situation but is very rare. Health care markets fail because all of the necessary requirements for perfect markets

Answer 1

The failure to compete. In many regions, the healthcare industry is highly concentrated, although there is broader demand for medical services. The enforcement of monopoly will play a role. Government also influences trade by selling it through the patent system for opportunities to innovate (pharmaceuticals, devices). As with health insurance, competition in health care can never be perfect. Due to both provider and patient factors, the products, treatments are not identical

Thus, health care does not really compete as equal products with each other. Each has its own degree of monopoly power and is a unique product. This is a market power force that can not be entirely purged from a market-based health system, irrespective of what government does or does not do.

Public good-  Many elements of wellness are public goods, which means that it costs nothing to enjoy the benefit for an actual individual, and an individual can not be exempted from enjoying it. An example is immunity from the herd. Public school systems (governments) require documentation of childhood vaccinations (or evidence of a qualified exemption) as evidence that a free market can under-supply herd immunity. Public assistance (Medicaid, public clinics and hospitals) often improves access to care, promoting, among others, the delivery of health care services for public goods.

Externalities. Herd immunity is a positive health care outwardness. Improved educational achievement and the involvement of the workforce associated with good health may therefore be possible. Both can reduce public service demands and improve economic growth which benefits society in ways that are not seen by health care transaction participants. Therefore, health care could be under-provided by the market. (A related document

Asymmetries of data. Doctors generally know more about how people will be affected by health services than do patients. This can foster demand induced by the supplier, contributing to an inefficiently high utilization level. In general, solutions in the private sector can be as effective or more effective than solutions in the public sector. It included a variety of ways to contract, track, detect fraud and handle treatment.