The Public Interest

The Political Economy of National Health

Rudolf Klein

Winter 1972

WHEN one starts trying to design an ideal medical care system from scratch—an intellectual sport which is threatening to become an academic olympiad as dissatisfaction with existing services grows and spreads—there is a choice of two basic models. The first is the “market economy” model. Its essential distinguishing feature is that the distribution of resources is determined by market forces. This means that there are cash payments by the consumers of medical care for services received, though there are a variety of ways in which market forces can be rigged and the consumers repaid either through state or private insurance schemes. The second is the “political economy” model. Its essential distinguishing feature is that the allocation of resources is centrally, that is politically, determined. In practice this usually means that services are wholly or largely free, though theoretically and logically this model is perfectly compatible with payments for services.

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