State Funding for Health-Care Services and Public Health: Is it based on the Principles of Economic Theory?

Ilias-Ioannis Kyriopoulos, Kostas Athanasakis and Tryfon Beazoglou
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Ilias-Ioannis Kyriopoulos: Department of Economics, London School of Economics and Political Science
Kostas Athanasakis: Department of Health Economics, National School of Public Health
Tryfon Beazoglou: Department of Behavioral Sciences and Community Health and Department of Economics, University of Connecticut, USA

South-Eastern Europe Journal of Economics, 2013, vol. 11, issue 1, 37-47

Abstract: This paper is based on the classification of healthcare services and public health actions in light of some fundamental principles of public economics. Specifically, public health actions can be regarded as a public good while healthcare services seem to be a private good. This difference should have a direct impact on their optimum provision by the state, and therefore this classification has to affect the rationale of a resource allocation which is based on economic theory. However, the data do not confirm a situation in which a public good (public health) is largely financed by the state. On the contrary, healthcare services, which have the properties and the characteristics of a private good, are funded by the state with a high percentage of health expenditure. Thus, this paper describes the paradox observed in the health sector, which highlights a mismatch between economic theory and the policies for optimum resource allocation in this sector.

Keywords: Public Health; Public Goods; Private Goods; Resource Allocation (search for similar items in EconPapers)
JEL-codes: I18 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:seb:journl:v:11:y:2013:i:1:p:37-47

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