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Health, government, and the poor : the case for the private sector

  • Birdsall, Nancy
  • James, Estelle

The authors present a case for user charges and some privatization of health care in developing countries. They demonstrate that - consistent with public choice theory - government actions in the health sector are neither equitable nor efficient in developing countries. In general, they increase the real income of influential middle and upper income groups - despite the fact that the greatest mortality gains would come from directing health spending to the poor. They discuss why government health interventions will become less effective than they have been. They point out that high mortality in developing countries is related more to poverty than it used to be, while pressure on governments to finance health care for the middle class and the rich is increasing because the population is aging and the costs of handling adult chronic diseases are rising. The inequity and inefficiency of government health programs reflect the current political equilibrium which, unfortunately, cannot be easily changed. Opportunities for change, including marginal changes in the distribution of political power, must be recognized and exploited whenever they arise. Information that increases public awareness of current inequities, fiscal stress, and tactical use of newly available resources may also create opportunities to alter the equilibrium.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 938.

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Date of creation: 31 Jul 1992
Date of revision:
Handle: RePEc:wbk:wbrwps:938
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  1. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
  2. Lewis, Maureen A. & Parker, Clover, 1991. "Policy and implementation of user fees in Jamaican public hospitals," Health Policy, Elsevier, vol. 18(1), pages 57-85, June.
  3. repec:oup:qjecon:v:98:y:1983:i:3:p:371-400 is not listed on IDEAS
  4. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  5. Pommerehne, Werner W & Schneider, Friedrich, 1978. "Fiscal Illusion, Political Institutions, and Local Public Spending," Kyklos, Wiley Blackwell, vol. 31(3), pages 381-408.
  6. Behrman, Jere R. & Birdsall, Nancy, 1988. "The equity-productivity tradeoff: : Public school resources in Brazil," European Economic Review, Elsevier, vol. 32(8), pages 1585-1601, October.
  7. Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-57, Part I Se.
  8. Peltzman, Sam, 1980. "The Growth of Government," Journal of Law and Economics, University of Chicago Press, vol. 23(2), pages 209-87, October.
  9. Harold Demsetz, 1979. "The Growth of Government," UCLA Economics Working Papers 157, UCLA Department of Economics.
  10. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
  11. Paul J. Gertler & Luis Locay & Warren C. Sanderson, 1987. "Are User Fees Regressive? The Welfare Implications of Health Care Financing Proposals in Peru," NBER Working Papers 2299, National Bureau of Economic Research, Inc.
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