Essay On Government Intervention In Health Care

Governments throughout the world intervene in the health sector. It is hardly for any economic activity to be free from the government intervention. In Malaysia, the government intervention shown in the three main categories, including provision of goods and services, redistribution and regulation under the dominant scopes of financing, production or delivery as well as regulation of healthcare industries (Folland, Goodman, & Stano, 2010). Undeniably, there are many factors could motivate intervention in healthcare by the government such as equity, efficiency and monopoly power. It is true that all these factors are arises due to the existence of market failure which acts as an economic rationale for government intervention. One of the dominant factors that could motivate intervention in healthcare by the government is equity factor. This factor is being boosted through the implementation of user fee system. The user fee system tends to promote equity through price discrimination, that is, charge the poor less than the rich for a given health service or product. Obviously, price discrimination contributes to the market failure had been seen as an economic rationale to encourage

It is the classic example of market failure. All in all, government intervention in healthcare is due to the government intervention itself. These interventions include the patent law which deliberated to advocate innovative activity and licensure which is intended to maintain minimal standards of quality. All these contribute to the monopoly power that dominates the whole market as well. The specific person or enterprise manages to control the whole market since they are the only supplier of a particular commodity. Hence, the resulting market failure encourages the government intervention through the price control mechanism although seemingly lead to welfare