Question

why the market for health care services is substanially different than the market for typical goods and services

Answer 1

The market for health care services is substantially different than the market for typical goods and services mainly because the market characteristics in health care industry differ from that of a perfectly competitive market. A perfect market exists when no individual buyer or seller can influence the price of a commodity in the market by his own actions. In health-care industry, there is a lot of influence of non-profit organizations, government (in form of tax benefit on insurance plans and other subsidies), insurance companies (by making reducing medical cost to patients) and also due to clinicians who act as independent business owners by prescribing certain medical services in which they profit more. This mainly happens due to asymmetry of information between the doctors and the patients. Due to all of these reasons, the market of health care services is very different than the market for typical goods and services.