Public and Private Roles in Health : Theory and Financing Patterns
1996
Musgrove, Philip
The appropriate role of the state in health is complex both in economic theory and in practice. Theory identifies three reasons for state action: (i) public goods or services with large externalities (involving efficiency); (ii) poverty (involving equity); and (iii) failings peculiar to insurance markets for health care (where both inefficiency and inequity arise). The insurance domain presents the most costly and difficult problems, and explains why - in contrast tom other sectors - governments tend to finance an increasing share of health care as incomes rise. Regulation, mandates and provision of information are also crucial public instruments; public provision of care is less important.
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