This article aims to show the complexity of organising a health service, and how much economics you can learn by understanding how institutions within the health sector operate.
In economics, there is a long-established idea that property rights and competitive exchange will lead to efficient outcomes. If I have a toothache, then I will go to a dentist and voluntarily pay for the use of the dentist’s equipment, expertise and time. I am happy to have my tooth fixed and the dentist can pay their rent. In this example, health service is a commodity traded in the market, just like potatoes or the services of a plumber. However, as soon as the dentist begins to charge me more than their costs (such as their equipment, their receptionist, but also the cost of becoming a dentist and the cost of their time), then other dentists should offer to do the same job for a lower price, while still being able to cover their costs.
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