Towards an alternative economics of health care

Abstract

It is argued here that an economics centred on subjective utility-maximization is unsuitable for the analysis and policy grounding of health care provision. To some extent, the peculiarities of health care have been recognized by mainstream health economists, who sometimes abandon Paretian welfare considerations to focus on needs instead. This article examines important peculiarities of health care that are relatively neglected in the literature. Some of these concern health care needs: while health itself is a universal need, needs for health care provision are largely involuntary, varied, and idiosyncratic. These issues have important consequences for the planning of health care systems and the extent of transaction costs in any market-based system. These factors, combined with the inherent dynamism of modern health care needs and capabilities, create an opening for alternative approaches to health care economics.