Several of the alleged market failures in the provision of health services actually reflect economic scarcity and therefore are best dealt with by market institutions, not government interventions. The market-failure interpretation of health-service problems that arise from adverse selection, moral hazard, and the doctor-patient relationship shows a fundamental misunderstanding and misapplication of basic economics.

Stephen Shmanske is a Research Fellow at the Independent Institute and Professor Emeritus of Economics in the College of Business and Economics at California State University, East Bay.
EconomyEntitlements and WelfareFree Market EconomicsHealth and HealthcarePublic Choice
Other Independent Review articles by Stephen Shmanske
Winter 2005/06 The Monopoly Nonproblem: Taking Price Discrimination Seriously