Healthcare and “Market Failure”

by Marc Fouradoulas

In the face of illness and suffering, private markets for healthcare services allegedly fail. Since the 1960s, neoclassical economists have legitimized the regulation and collectivization of this sector under the term “market failure.” This assumption forms the foundation of the discipline of health economics and its attempt to replace the failed market using econometrics. In addition to widespread ethical principles such as equality of access and solidarity, health economics legitimizes collectivist state intervention for the development, maintenance, and regulation of national healthcare systems. The threat of government failure is to be averted by health policy interventions, and health economic models and research (health services research, econometric cost-benefit studies, etc.) are supposed to inform these interventions. Health economists — so-called social engineers — in line with politicians, aim at technocratic management of healthcare systems and the associated political discourse. The consequences are far-reaching: compulsory insurance, price controls, and third-party financing of all services ultimately transform the entire sector into a bureaucratic form of economy.

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