Questions for Discussion
1. Define externalities in consumption and production of goods and services. Why do they occur? What are examples of externalities in the health field? Explain why the presence of externalities will, in the absence of some collective action, lead to a sub-optimal rate of output. What type of collective action is called for?
2. What are the economic rationales for different types of government intervention in health care?
3. Explain the rationale for requiring everyone who can afford it to purchase, at a minimum, catastrophic health insurance.
4. What economic arguments support government financing of personal health services to certain population groups?
5. “ We all benefit by having physicians available in case we need them. Therefore the government should subsidize medical education.” Critique this justification of governmental subsidies based on an externalities argument.