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|
|Date of revision:|
|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: |
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.:
- Becker, Edmund R & Sloan, Frank A, 1985. "Hospital Ownership and Performance," Economic Inquiry, Western Economic Association International, vol. 23(1), pages 21-36, January.
- Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-83, May.
- Laurence J. Kotlikoff & Jagadeesh Gokhale, 1993.
"The equity of social services provided to children and senior citizens,"
9311, Federal Reserve Bank of Cleveland.
- 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," NBER Working Papers 4305, National Bureau of Economic Research, Inc.
- 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.
- Gruber, Jonathan & Poterba, James, 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 701-33, August.
- Gruber, J. & Poterba, J., 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," Working papers 94-10, Massachusetts Institute of Technology (MIT), Department of Economics.
- 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).
- Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-77, October.
- Vining, Aidan R & Boardman, Anthony E, 1992. " Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-39, March.
- 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.
- 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.
- David M. Cutler & Louise M. Sheiner, 1993.
"Policy Options for Long-Term Care,"
NBER Working Papers
4302, National Bureau of Economic Research, Inc.
- 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 128-38, 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.
- Samuel Preston, 1984. "Children and the elderly: Divergent paths for America’s dependents," Demography, Springer, vol. 21(4), pages 435-457, November.
- 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.
- Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
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.