Question

read the following prompt then address the question based on what you learned about the economics of health care as a Text Submission.

Prompt;

Under the current U.S. health care system, insurance companies often perform the role done by government agencies under the Canadian system. That is, they pay the bills, and they limit the care that people are able to consume.

Question;

Why might health insurance companies be expected to do a better job in performing these functions than a government agency?

Begin your answer by rephrasing the question as a statement. The best way to start an answer is to rephrase the question in the form of a statement. Opening your answer in this way signals to the professor that you have read and understood the question. Rephrasing the question also helps you to stay focused on providing an answer to that question right from the start.

Answer 1

It is true that under the current US health care system, insurance companies play the role what government agencies perform under the Canadian system.

According to the policy of laissez- faire, every sector of the economy should be kept away from government intervention and should be allowed to operate freely.

Based on this economic theory, the private sector in the form of insurance companies, is expected to be more efficient and optimal than the government run services. Private sector or the insurance companies generally have an incentive to provide better medical services at competitive prices to the patients. Whereas government - run agencies and its employees have no such an incentive, as they draw a fixed salary in exchange of their services. This is the reason why US medical system has opted for private - sector driven healthcare system.