HEALTH-CARE - MARKET FORCES OR GOVERNMENT -REGULATION

Market competition is regarded as the best tool for achieving allocati ve efficiency in branches that have no market failure conditions in pl ace. The author examines the health care environment to answer the que stion of trade-offs between market competition and government regulati on in this very sensitive branch of the national economy. Market compe tition in health care may lead to achievement of some aspects of effic iency - such as consumer satisfaction, and quality of delivery of serv ices; however, it may fail in cases of allocative efficiency. Limits o f market forces in health care are connected especially with the follo wing: a noncompetitive environment, insufficient information, maximali zation and redistribution (equity) issues. Market competition in healt h care may lead to overconsumption because of an information asymmetry and producer-induced demand. The US health-care system, with about 15 % of the GDP spent on health expenditures is often used as an example of this. But how can we determine the effective allocative level of c onsumption of health care? Most will agree that some level of redistri bution to cover the health-care expenditures of poor persons is necess ary. The question is, to what; extent should health-care services be a vailable to everybody regardless of their ability to pay? Doubtless so me kind of public finance commitment to financing health-care expendit ures is necessary; however, the scope of this intervention and the con crete ways of public financing are often debated. It must be stressed that all kinds of government intervention in health-care are subject t o the government failure argument. If nothing else, demotivation, mora l hazard, uniformity, technical inefficiency may be expected as a resu lt of government action. Neither market nor government can handle ever y aspect of the health-care issue in an efficient way. Some aspects co uld be better achieved with competition, but many others require gover nment intervention. For example, efficient production may result from market forces but government seems to be the best tool for limiting th e excessive growth of health care expenditures within the economy as a whole. The author ends with the argument that there are no uniform an d universalty valid solutions about how to deliver health-care the pub lic. Each aspect of health-care delivery must be evaluated separately with regards to the national/local environment. This should be the lea ding motive behind the health-care reforms, both in the Czech and in t he Slovak Republic.