The role of factors beyond the economic mechanism

One idea running through this book has been that the health sector cannot be reliably regulated solely by purely bureaucratic, governmental coordination or by purely market coordination. What is needed is a combination of the two, and a far more favorable combination than the one so far. That is why several changes have been recommended in ownership, the structure of health-care financing and insurance, incentives, and prices, in other words, in the economic mechanism of health care. Having said that, not even the best of combinations is going to be sufficient to ensure that the sector operates well. Other factors are also needed.

Governmental supervision and regulation of the health system has to be reinforced, on the delivery and financing sides alike. The supervision has to cover not only the private sector, but public organizations as well. Suppose that a public hospital or outpatient clinic receives greater economic autonomy, in line with the proposals in this book, and that the various financial incentives exert a stronger effect on its management and on its employees. Those circumstances will introduce into their behavior features similar to the ones found in the private sector.

People in the post-socialist countries consider this proposal for state oversight self-evident. Aversion and opposition to the spread of private ownership and the market will be lessened if the development of state supervision and coordination are given emphasis in the reform proposals.