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  • Anforme Should UK health care be provided by the government or private sector?

Anforme Should UK health care be provided by the government or private sector?

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Tom Allen, Head of Economics, Eton College, examines the debate about how health care should be supplied.

Summary of contents:

  • The case for government provision of health care:
  • Health care is a merit good and merit goods are under-consumed in a free market, with diagrammatic example of inoculations for a flu jab.
  • The government can get the benefit of economies of scale in health provision.
  • Private providers of health care may put profit before patient care.
  • The case against state provision of health care:
  • Diseconomies of scale arising from universal health care provision.
  • The minimum efficient scale for health care provision is low.
  • Monopoly provision may lead to x-inefficiency.
  • The lack of price signals linking producers and consumers.
  • The problem of zero price provision causes demand to outstrip supply.
  • The best of both worlds? A look at internal markets, the Private Finance Initiative and further decentralisation.


This article is featured in ET volume 19 issue 2.

Tom Allen, Head of Economics, Eton College, examines the debate about how health care should be supplied.

Summary of contents:

  • The case for government provision of health care:
  • Health care is a merit good and merit goods are under-consumed in a free market, with diagrammatic example of inoculations for a flu jab.
  • The government can get the benefit of economies of scale in health provision.
  • Private providers of health care may put profit before patient care.
  • The case against state provision of health care:
  • Diseconomies of scale arising from universal health care provision.
  • The minimum efficient scale for health care provision is low.
  • Monopoly provision may lead to x-inefficiency.
  • The lack of price signals linking producers and consumers.
  • The problem of zero price provision causes demand to outstrip supply.
  • The best of both worlds? A look at internal markets, the Private Finance Initiative and further decentralisation.


This article is featured in ET volume 19 issue 2.

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