Question

Based from chapter 14 in the textbook "Health economics and financing (5th edition),

What is the harm in privatizing public goods such as health and medicine?

Answer 1

Answer

Public goods are non-rival and non-excludable. However, this is not the case with private goods or goods provided by private companies.

There are many industries which perform an important public service, e.g., health care, education and public transport. In these industries, the profit motive shouldn’t be the primary objective of firms and the industry. For example, in the case of health care, it is feared privatising health care would mean a greater priority is given to profit rather than patient care. Also, in an industry like health care, arguably we don’t need a profit motive to improve standards. When doctors treat patients, they are unlikely to try harder if they get a bonus.