Market failures can be defined as setbacks brought about by a market-based system or lack of ability of the market arrangement to attain societal objectives and aspirations Welch and Welch (2009). Every society constantly seeks to provide for the basic needs considered necessary by individuals, households and groups of individuals for their survival. Naturally, every buyer of the society wishes to get those needs at the least price possible while sellers seek to sell their goods and services at the highest price possible Luft (2008).
The purpose of this paper is to explore causes of market failures regarding our health care crisis. This paper seeks to establish whether the health crisis facing our society is purely market-based or can be attributed to the failure of the government to intervene where and when necessary in insulating the society from the weaknesses of our market system. The paper will also attempt to find out other possible causes of this adverse phenomenon.
General Causes of Market Failures
According to Welch and Welch (2009), market failures results from various socioeconomic factors. For instance, when competition which is the basis of a market based economy forces out majority of the sellers and the market is left to fewer sellers. Under such circumstances the interaction between the sellers and the buyers becomes unbalanced to the disadvantage of the buyers who becomes faced by increased prices, lesser alternatives and reduced attention to quality by the sellers. Secondly, a pure market system lacks the ability to avail safeguard for those who lack enough ability to afford basic needs for themselves like the disabled and the children living in poverty. Thirdly, absolute market systems lack the capacity to protect those who do not have proper awareness needed to make informed decisions about what they buy or employment. Fourthly, market failure can also arise when unfairness based on age, race or gender culminates into unequal treatment for some workers. Lastly, market failure can take place when the profit-motivated, cost-reducing efforts of businesses lead to costs that must be borne by all members of the society like extra health care costs.
Three major Points of my Research and Pieces of Information available
Health care operates within the parameters of the same market forces that guide and regulate other socioeconomic activities of the society. As such, the above mentioned general causes of market failure can explain market failures regarding our health care crisis. To be sure it is unscientific to argue or suppose that one single cause of market failure is wholly responsible for health crisis facing us today. However, one cause can be said to bear greater responsibility in bringing about the crisis relative to other known causes.
Luft (2008) argues that even though the greater number of economists believes that competitive markets attain the most efficient distribution of resources, most markets do not meet the conditions economists require for them to be characterized as competitive. In addition, markets do very little to encourage equity. This refers to the inability of the market economies to provide for those who can not provide for themselves like the disabled and those born into poverty. Apart from the market based causes of the market failures regarding our heath care, reluctance by the government of the day in implementing fully a policy geared towards reversing market failures related to heath care may result to change of the policy by a future regime. Such changes may bring about policy vacuum and confusion thereby causing failure of our health care.
Luft, H. S. (2008). Total cure: the antidote to the health care crisis. Cambridge, MA: Harvard University Press. Print.
Welch, P. J. and Welch, G. F. (2009). Economics: Theory and Practice. New York: John Wiley and Sons. Print.