43 Questions
What is a condition for fair market exchange?
Buyer and seller have equal bargaining positions
What is an example of market failure?
Monopoly
What is information asymmetry?
Producers or consumers have incomplete information
What is an externality?
An unintended consequence of production or consumption
What is the purpose of government intervention in the health sector?
To establish the rules of the game
What is a characteristic of monopsony?
One buyer in the market
What is the result of market failure due to information asymmetry?
Erroneous production and consumption decisions
What is one of the limitations of focusing on a country’s level of performance?
It fails to call attention to equity concerns
What is one way to evaluate equity in health outcomes?
By looking at health outcomes for disadvantaged groups
Why do countries need to set priorities in moving toward the goals of UHC?
Because resources are limited
What is meant by efficiency in the context of resource allocation?
Producing more with the same amount of resources
What is the concept of equity in the context of resource allocation?
Distributing resources fairly among individuals
What is an example of a principal-agent relationship in the health sector?
Government and citizens
What is a result of regulatory capture?
Regulatory agencies are dominated by the industries they regulate
What is the goal of improving public sector effectiveness in health reforms?
To improve accountability and responsiveness
What is the argument for consumer sovereignty?
Individuals are best off if they are allowed to make their own choices
What is an example of a government failure?
All of the above
What is the goal of enhancing accountability in health reforms?
To improve public sector effectiveness
What is the principle behind the 'entitlement theory'?
It is unfair to tax away an individual's resources to spend on other people's needs
Establishing a legal framework is a basic government function.
True
Market exchange can be considered fair only when the buyer and seller have unequal bargaining positions.
False
Monopoly refers to a situation where there are many buyers of a good or service.
False
Information asymmetry occurs when both producers and consumers have equal access to information.
False
Externalities can be either beneficial or harmful to third parties affected by a transaction.
True
Government intervention is required in the health sector to correct market failures.
True
Efficiency and equity are mutually exclusive goals in health care provision.
False
Government failures can occur in the health sector, leading to inefficient allocation of resources.
True
Focusing on a country's level of performance is enough to address equity concerns.
False
All countries can provide all the healthcare that their citizens need.
False
Efficiency and equity are always mutually exclusive goals in healthcare provision.
False
Ethical considerations play no role in health care provisions.
False
Countries do not need to set priorities in moving towards the goals of Universal Health Coverage (UHC).
False
Equity is about ensuring fairness in the distribution of society's resources.
True
Tradeoffs are necessary when designing government policies that aim to balance efficiency and equity.
True
Public goods are characterized by being non-excludable and non-rivalrous.
True
In a principal-agent relationship, the government acts as the principal and the people act as the agent.
False
Regulatory capture is a type of government failure where regulatory agencies prioritize the public interest over the interests of industries they regulate.
False
The case for consumer sovereignty argues that individuals should have limited freedom to make their own choices about goods and services.
False
Market failures, such as public goods and externalities, are reasons for government intervention in the health sector.
True
Government intervention is only necessary in cases of market failures.
False
One-stop shops are a way to improve public sector effectiveness in health reforms.
True
The entitlement theory argues that individuals have a right to certain goods and services, based on the principles of justice in acquisition and transfer of holdings.
True
Bundled choices, such as referendums and elections, are a type of government failure.
False
Study Notes
The Interaction between Market and Government in the Health Sector
- Basic government functions:
- Providing legal framework and services for society
- Establishing "rules of the game"
- Creating and protecting property rights
- Providing contractual rights and enforcing them
- Ensuring fairness in market exchange
Market Exchange and Market Failures in the Health Sector
- Conditions for fair market exchange:
- Buyer and seller have equal bargaining positions
- Buyer and seller are both fully informed
- Buyer and seller can exclude non-subjects of exchange
- Object of exchange is divisible into exchangeable units
- Consequences of exchange are internalized
- Conditions of exchange are consistent with social consensus of fairness
- Reasons for market failure:
- Market power (monopoly or monopsony)
- Information asymmetry
- Externalities (positive or negative)
- Public goods (non-excluded, non-rivalrous)
Ethical and Equity Considerations in Health Care Markets
- Market distributes goods according to willingness to pay
- Some sectors of society may not have the ability to pay for goods they need
- Society regards health care as an entitlement or right
- Ethical and equity questions arise in health care markets
Government Interventions and Government Failures in the Health Sector
- Policy instruments used by government to intervene in the market:
- Based on level of state involvement
- Principal-agent relationship:
- Government acts as perfect agent when it fully internalizes people's welfare
- Government failure occurs when it fails to achieve its intended outcomes
- Types of government failures:
- Problems with collective decisions
- Intensity and ranking of preferences not reflected in voting process
- Bundled choice
- Problems concerning the agent
- Regulatory capture
- Bureaucratic capture
Efficiency and Equity Concerns in Health
- The case for consumer sovereignty:
- Economic efficiency
- Personal satisfaction
- Individual fairness
- The case for government intervention:
- Market failures
- Equity
- The role of equity:
- Equity is a basis for judging the distribution of health outcomes
- Focus on health outcomes for disadvantaged groups
- The role of priority setting:
- Countries cannot provide all health care their citizens need
- Resources are limited, and health competes with other sectors for funds
- Nations need to set priorities in moving toward Universal Health Coverage (UHC)
Ethics, Equity, and Priority Setting
- Arguments about equity and priority setting often invoke ethical questions
- Understanding and exploring underlying ethical considerations can help clarify arguments and positions in health care provisions
- Ethical considerations:
- Deciding which conditions and groups to focus on first
- Tradeoffs between efficiency and equity
- Efficiency vs. equity:
- Efficient use of scarce resources
- Fair distribution of resources among individuals
- Tradeoffs between efficiency and equity
The Interaction between Market and Government in the Health Sector
- Basic government functions:
- Providing legal framework and services for society
- Establishing "rules of the game"
- Creating and protecting property rights
- Providing contractual rights and enforcing them
- Ensuring fairness in market exchange
Market Exchange and Market Failures in the Health Sector
- Conditions for fair market exchange:
- Buyer and seller have equal bargaining positions
- Buyer and seller are both fully informed
- Buyer and seller can exclude non-subjects of exchange
- Object of exchange is divisible into exchangeable units
- Consequences of exchange are internalized
- Conditions of exchange are consistent with social consensus of fairness
- Reasons for market failure:
- Market power (monopoly or monopsony)
- Information asymmetry
- Externalities (positive or negative)
- Public goods (non-excluded, non-rivalrous)
Ethical and Equity Considerations in Health Care Markets
- Market distributes goods according to willingness to pay
- Some sectors of society may not have the ability to pay for goods they need
- Society regards health care as an entitlement or right
- Ethical and equity questions arise in health care markets
Government Interventions and Government Failures in the Health Sector
- Policy instruments used by government to intervene in the market:
- Based on level of state involvement
- Principal-agent relationship:
- Government acts as perfect agent when it fully internalizes people's welfare
- Government failure occurs when it fails to achieve its intended outcomes
- Types of government failures:
- Problems with collective decisions
- Intensity and ranking of preferences not reflected in voting process
- Bundled choice
- Problems concerning the agent
- Regulatory capture
- Bureaucratic capture
Efficiency and Equity Concerns in Health
- The case for consumer sovereignty:
- Economic efficiency
- Personal satisfaction
- Individual fairness
- The case for government intervention:
- Market failures
- Equity
- The role of equity:
- Equity is a basis for judging the distribution of health outcomes
- Focus on health outcomes for disadvantaged groups
- The role of priority setting:
- Countries cannot provide all health care their citizens need
- Resources are limited, and health competes with other sectors for funds
- Nations need to set priorities in moving toward Universal Health Coverage (UHC)
Ethics, Equity, and Priority Setting
- Arguments about equity and priority setting often invoke ethical questions
- Understanding and exploring underlying ethical considerations can help clarify arguments and positions in health care provisions
- Ethical considerations:
- Deciding which conditions and groups to focus on first
- Tradeoffs between efficiency and equity
- Efficiency vs. equity:
- Efficient use of scarce resources
- Fair distribution of resources among individuals
- Tradeoffs between efficiency and equity
Understand the roles of government and market exchange in the healthcare sector, including their interactions and potential failures. Learn about the conditions necessary for fair market exchange and how governments provide a legal framework for society.
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