Friday, January 11, 2013

Who Should Provide Health Care?

This New York Times article asks who should provide health care - the market or the government?  As this is an important question as the answer leads us down very different paths as to how health care should be produced here in the United States.  To help answer this question, we need to address a more fundamental question:  is health care a public good or a private good?

To me the biggest issue is in regard to the non-excludable characteristic of a public good.  A public good is non-excludable, when the costs of excluding non-payers who receive benefits from consumption are so high that a profit-maximizing private firm is unwilling to supply the good.  Some view that society should not exclude others from receiving health care - even if they cannot pay for it, and some think that society should exclude others from receiving health care if they are unable to pay for the health care they receive.

Additionally, a public good is non-rivalrous, meaning that my consumption of a good does not reduce your consumption of the good.  Bandages are rivalrous since my consumption of a bandage will eliminate you from using that exact same bandage.  Health research is non-rivalrous, since once the information has been made available my consumption of that health research information does not reduce your consumption of the exact same health research information.

No comments: