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Healthcare Czar

In: Business and Management

Submitted By okiprap
Words 1581
Pages 7
There are several rationales for or against government intervention in or regulation of the health care industry in the United States. This section will focus on the grounds on which government intervention in or regulation of the health care industry in the United States might be justified. The overriding objective in regulation was, and continues to be, rate setting (Folland, Goodman, & Stano, 2010) in the health care industry. Generally, markets are problematic in health care because markets do not provide goods efficiently or equitably. Though markets usually work well, however, there are many circumstances in which market forces, left to them, will fail to maximize economic and social welfare, and, as a consequence, there will be a case for government interventions (Hayes, et al., 2011). Its primary goal is to limit the high price-cost margins that would otherwise be expected (Folland, Goodman, & Stano, 2010), along with promoting the best minimal quality levels while reducing waste and abuse of expenditures. Recent review from Cochrane Database of Systematic Reviews identified four main categories of market failure that might justify government intervention: intervention externalities; imperfect information; demerit goods; time-inconsistent preferences (a situation in which an individual’s preferences change over time without any change in information (Hayes, et al., 2011). An example of demerit good is something that is seen as intrinsically unhealthy, degrading or socially damaging towards other people or society at large once consumed (Hayes, et al., 2011) (i.e., tobacco, alcohol, and gambling). An article from Obesity Reviews looked at obesity as catalyst for justification. First, to promote equity, assessments of bias against the obese in the provision of health care or in the labor market need to be identified. Second, such intervention may be...

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