Health Care Market Deviations from the Ideal Market

Abstract

A common argument in the health policy debate is that market forces allocate resources efficiently in health care, and that government intervention distorts such allocation. Rarely do those making such claims state explicitly that the market they refer to is an ideal in economic theory which can only exist under very strict conditions. This paper explores the strict conditions necessary for that ideal market in the context of health care as a means of examining the claim that market forces do allocate resources efficiently in health care.

Keywords

• health economics
• ideal market
• market structure
• market failure
• perfect competition
• market forces
• supply/demand
• equity
• economic efficiency