Role of Government in Health Care Market
Numerous publicly funded health care programs help to provide for the elderly, disabled, military service families and veterans, children, and the poor, and federal law ensures public access to emergency services regardless of ability to pay; however, a system of universal health care has not been implemented nation-wide.
Massachusetts has adopted a universal health care system through the Massachusetts 2006 Health Reform Statute. It mandates that all residents who can afford to do so purchase health insurance, provides subsidized insurance plans so that nearly everyone can afford health insurance, and provides a "Health Safety Net Fund" to pay for necessary treatment for those who cannot find affordable health insurance or are not eligible.
The cost impact of a mixed public-private system is subject to debate. Free-market advocates claim that there is direct correlation between government's health care spending and intervention in the health care market and increases in health care costs. Government intervention contributes to a "dysfunctional system of third-party payments" that removes the patient as a major participant in the financial and medical choices that affect costs. Increased utilization is indeed the primary driver of rising health care costs in the
As an example of how government intervention has had unintended consequences, in 1973, the federal government passed the Health Maintenance Organization Act, which heavily subsidized the HMO business model — a model that was in decline prior to such legislative intervention. The law was intended to create market incentives that would lower health care costs, but HMOs have never achieved their cost-reduction potential. Piecemeal market-based reform efforts are complex. One study evaluating current popular market-based reform policy packages concluded that if market-oriented reforms are not implemented on a systematic basis with appropriate safeguards, they have the potential to cause more problems than they solve.
Source:Wikipedia