Government Intervention in the Markets for Education and Health Care: How and Why?
Education and health care are the two largest government expenditure items in the United States. The public sector directly provides the majority of educational services, through the public school bureaucracy, while most public support for health care is channelled through a system of tax-supported government payments for services provided by private providers. The contrast between public policies in these markets raises a host of questions about the scope of government in a mixed economy, and the structure of policies for market intervention. This paper examines how two standard arguments for government intervention in private markets, market failure and redistribution, apply to the markets for education and medical care. It then considers the 'choice of instrument' problem, the choice between intervention via price subsidies, mandates, and direct public provision of services in these markets. Economic arguments alone seem unable to explain the sharp divergence between the nature of public policies with respect to education and medical care. Moreover, there is virtually no evidence on the empirical magnitudes of many of the key parameters needed to guide policy in these areas, such as the social externalities associated with primary and secondary education or the degree to which adverse selection in the insurance market prevents private insurance purchase.
|Date of creation:||Nov 1994|
|Publication status:||published as Individual and Social Responsibility, Victor R. Fuchs, ed., pp. 277-304(Chicago: University of Chicago Press, 1996).|
|Note:||HC LS PE|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Keeler, Emmett B. & Rolph, John E., 1988. "The demand for episodes of treatment in the health insurance experiment," Journal of Health Economics, Elsevier, vol. 7(4), pages 337-367, December.
- Edward P. Lazear, 1976.
NBER Working Papers
0145, National Bureau of Economic Research, Inc.
- Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-641, June.
- Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-183, May.
- Charles Wilson, 1980. "The Nature of Equilibrium in Markets with Adverse Selection," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 108-130, Spring.
- Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-277, October.
- Vining, Aidan R & Boardman, Anthony E, 1992. "Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-239, March.
- Sonstelie, Jon, 1982. "The Welfare Cost of Free Public Schools," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 794-808, August.
- David M. Cutler & Louise M. Sheiner, 1993.
"Policy Options for Long-Term Care,"
NBER Working Papers
4302, National Bureau of Economic Research, Inc.
- Becker, Edmund R & Sloan, Frank A, 1985. "Hospital Ownership and Performance," Economic Inquiry, Western Economic Association International, vol. 23(1), pages 21-36, January.
- Sherwin Rosen, 1997.
"Public Employment, Taxes, and the Welfare State in Sweden,"
in: The Welfare State in Transition: Reforming the Swedish Model, pages 79-108
National Bureau of Economic Research, Inc.
- Sherwin Rosen, 1995. "Public Employment, Taxes and the Welfare State in Sweden," University of Chicago - George G. Stigler Center for Study of Economy and State 106, Chicago - Center for Study of Economy and State.
- Sherwin Rosen, 1995. "Public Employment, Taxes and the Welfare State in Sweden," NBER Working Papers 5003, National Bureau of Economic Research, Inc.
- Henry J. Aaron, 1996. "Health Care Reform: The Clash of Goals, Facts, and Ideology," NBER Chapters, in: Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, pages 107-142 National Bureau of Economic Research, Inc.
- Laurence J. Kotlikoff & Jagadeesh Gokhale, 1993.
"The Equity of Social Services Provided to Children and Senior Citizens,"
NBER Working Papers
4305, National Bureau of Economic Research, Inc.
- Kotlikoff, L.J. & Gokhale, J., 1993. "The Equity of Social Services Provided to Children and Senior Citizens," Papers 20, Boston University - Department of Economics.
- Laurence J. Kotlikoff & Jagadeesh Gokhale, 1993. "The equity of social services provided to children and senior citizens," Working Paper 9311, Federal Reserve Bank of Cleveland.
- Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-377, May.
- Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August.
- Gruber, J. & Poterba, J., 1994.
"Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed,"
94-10, Massachusetts Institute of Technology (MIT), Department of Economics.
- Jonathan Gruber & James M. Poterba, 1993. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," NBER Working Papers 4435, National Bureau of Economic Research, Inc.
- Hanushek, E.A. & Rivkin, S.G., 1994. "Understanding the 20th Century Explosion in U.S. School Costs," RCER Working Papers 388, University of Rochester - Center for Economic Research (RCER).
- Samuel Preston, 1984. "Children and the elderly: Divergent paths for America’s dependents," Demography, Springer;Population Association of America (PAA), vol. 21(4), pages 435-457, November.
- Henry J. Aaron, 1994. "Issues Every Plan to Reform Health Care Financing Must Confront," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 31-43, Summer.
- Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4916. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.