The most-cited study analyzing the economics of healthcare is Kenneth J. Arrow's article entitled "Uncertainty and the Welfare Economics of Medical Care". This paper was published in the December 1963 edition of The American Economic Review. Unfortunately, Professor Arrow's conclusion that "the laissez-faire solution for medicine is intolerable" is fundamentally wrong.
In this paper Professor Arrow defines the methodological background he uses, differentiates the medical-care market from the usual commodity markets, and compares the behavior of the medical-care market to the competitive model which disregards the fact of uncertainty and the ideal competitive market which takes account of uncertainty. The article is incredibly technical and dense. Basically, the author claims that the medical-care market is a "special" market that the State must regulate extensively to produce "optimal" outcomes for society.
The LIBERTARIAN BIOETHICS BLOGger, obviously, disagrees with Professor Arrow's conclusions. As a non-economist, however, I shall not attempt to delve into the intricacies of the argument. Instead, I refer the reader to any of the standard libertarian websites, where one can easily find many articles refuting Arrow.
In this paper Professor Arrow defines the methodological background he uses, differentiates the medical-care market from the usual commodity markets, and compares the behavior of the medical-care market to the competitive model which disregards the fact of uncertainty and the ideal competitive market which takes account of uncertainty. The article is incredibly technical and dense. Basically, the author claims that the medical-care market is a "special" market that the State must regulate extensively to produce "optimal" outcomes for society.
The LIBERTARIAN BIOETHICS BLOGger, obviously, disagrees with Professor Arrow's conclusions. As a non-economist, however, I shall not attempt to delve into the intricacies of the argument. Instead, I refer the reader to any of the standard libertarian websites, where one can easily find many articles refuting Arrow.
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