Podcast
Questions and Answers
What may managers prioritize over maximizing company profits?
What may managers prioritize over maximizing company profits?
- Maximizing shareholder value
- Increasing job security
- Maximizing their salaries or length of stay in the job (correct)
- Minimizing environmental impact
What can be a reason for government failure in administering certain tasks?
What can be a reason for government failure in administering certain tasks?
- Low wages that prevent hiring competent people (correct)
- High wages for bureaucrats
- Lack of transparency in governance
- Over-reliance on technology
In which type of countries may the private sector play a larger role in healthcare?
In which type of countries may the private sector play a larger role in healthcare?
- Poor countries (correct)
- Countries with high levels of corruption
- Rich countries
- Developing countries
What is one way to achieve goals in the healthcare system, according to the 'Competition' approach?
What is one way to achieve goals in the healthcare system, according to the 'Competition' approach?
What is a characteristic of rich countries in terms of their approach to healthcare?
What is a characteristic of rich countries in terms of their approach to healthcare?
What is the main difference between the 'Regulation' and 'Competition' approaches to healthcare?
What is the main difference between the 'Regulation' and 'Competition' approaches to healthcare?
Why may production be more efficient with a natural monopoly?
Why may production be more efficient with a natural monopoly?
What is one way to regulate an industry with market power?
What is one way to regulate an industry with market power?
Why may governments negotiate with drug companies and doctors?
Why may governments negotiate with drug companies and doctors?
What is an example of government provision?
What is an example of government provision?
According to the theory of local capture, what motivates politicians?
According to the theory of local capture, what motivates politicians?
Why might government provision of goods be inefficient?
Why might government provision of goods be inefficient?
What can lead to government failure?
What can lead to government failure?
What is a criticism of government provision of goods?
What is a criticism of government provision of goods?
What is the primary purpose of informing consumers and providers in government intervention?
What is the primary purpose of informing consumers and providers in government intervention?
What type of government intervention determines how a private activity may be undertaken?
What type of government intervention determines how a private activity may be undertaken?
What is characterized by being non-rival and non-excludable?
What is characterized by being non-rival and non-excludable?
What is an example of a mandate in government intervention?
What is an example of a mandate in government intervention?
What type of government intervention is more typical of developing countries?
What type of government intervention is more typical of developing countries?
What is an example of a public good in health care?
What is an example of a public good in health care?
What is the purpose of taxing certain goods in government intervention?
What is the purpose of taxing certain goods in government intervention?
What is a characteristic of government intervention in developed countries?
What is a characteristic of government intervention in developed countries?
What is the primary reason for market failure in the case of merit goods?
What is the primary reason for market failure in the case of merit goods?
What is the main issue with public goods?
What is the main issue with public goods?
Why do governments intervene in the market to correct the issue of externalities?
Why do governments intervene in the market to correct the issue of externalities?
What is a common example of a merit good?
What is a common example of a merit good?
Why do factories not pay extra for polluting the air?
Why do factories not pay extra for polluting the air?
Why do governments often use mechanisms other than price to ration healthcare?
Why do governments often use mechanisms other than price to ration healthcare?
What is a policy option for addressing negative externalities such as air pollution?
What is a policy option for addressing negative externalities such as air pollution?
What is an example of a charitable externality that justifies large social insurance programs?
What is an example of a charitable externality that justifies large social insurance programs?
What is the term used to describe individuals who benefit from public goods without contributing to their production?
What is the term used to describe individuals who benefit from public goods without contributing to their production?
What is the primary issue with government intervention in the market?
What is the primary issue with government intervention in the market?
Why do insurance companies not want to insure people with pre-existing diseases?
Why do insurance companies not want to insure people with pre-existing diseases?
What is the goal of government intervention in healthcare?
What is the goal of government intervention in healthcare?
What is a policy option for addressing incomplete markets in the insurance industry?
What is a policy option for addressing incomplete markets in the insurance industry?
What is an example of a merit good?
What is an example of a merit good?
What is an example of an industry with market power?
What is an example of an industry with market power?
Why do many developing countries have universal health care systems?
Why do many developing countries have universal health care systems?
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Study Notes
Government Intervention in Health Care Markets
- Not all managers aim to maximize company profits, some may prioritize their salaries or job security
Reasons for Public Intervention
- Government Failure: lack of capacity to administer, low wages, corruption, and limited taxation ability
- Public Goods: non-rival and non-excludable, e.g., disease control, food and water safety
- Merit Goods: goods considered good for individuals regardless of their preferences, e.g., compulsory education, wearing seat belts
- Externalities: third-party effects, e.g., air pollution, contagious diseases
- Incomplete Markets: lack of insurance for pre-existing conditions
- Market Power: monopolies, oligopolies, and price controls
Types of Government Intervention
- Inform: persuade consumers, providers, and suppliers to act in a certain way, e.g., publicizing health risks
- Regulate: determine how private activities are undertaken, e.g., setting standards for doctors and drug trials
- Finance: provide health care with public funds, e.g., public funding for health services
- Provide: deliver health services using publicly-owned facilities and civil service staff, e.g., crown corporations
- Taxes/Subsidies: taxing goods, e.g., cigarettes, and subsidizing health care
Role of Public and Private Sector
- No one-size-fits-all approach, depends on the country's income level
- Poor countries: larger role for the private sector, due to limited taxation ability and inability to provide health care for all
- Rich countries: governments can afford to intervene more in health care, with a focus on regulatory mechanisms and financial incentives
Government Failure
- Theory of Local Capture: politicians prioritize special interest groups over the economy
- Bureaucracy and Efficiency: government monopoly, lack of efficiency, and preference for quick fixes
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