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Submitted by Rob Yates on

No short route for health

You are absolutely right Shanta, the short route is the market and over 50 years ago Kenneth Arrow showed that this is not the route to go for health. This is because of the fundamental market failure caused by huge asymmmetries in information between suppliers and consumers of services. Buying health services is definitely not like buying sandwiches where on viewing (and maybe squeezing) the product you can make a fairly reasonable judgment about its quality. You can also make rational decisions when asked: do you want brown or white bread, pickles, mayonnaise etc.

Now compare this when you visit a doctor selling services in a health market and you have a strange abdominal pain. When she insists on a bank of expensive tests how can you risk turning any of them down? Likewise how on earth can one judge the effectiveness of the range of little pills offered up as a cure? It's therefore very easy to get ripped off.

Given this vulnerability, sick and desperate people are often very bad purchasers of healthcare and this is why across the globe, states step in because they can do a better job. That's how we end up with the longer route. I am not saying by any means that states always perform will in this area and the WDR highlighted many examples of the long route failing for a variety of reasons. However at all income levels there are scores of examples of state governed agencies doing a great job in purchasing health services efficiently and equitably for their populations.

On the other hand I can't think of a single example, in health, of where the short route, ie the market, has worked. It's a pity that WDR 2004 didn't say this more clearly but it's great that, through the recent Lancet Commission, the authors of WDR 1993 are saying this loud and clear.

Rob Yates
www.twitter.com/yates_rob