Abstract
BackgroundThe increasing prevalence of chronic disease represents a significant burden on most health systems. This paper explores the market failures and policy failures that exist in the management of chronic diseases.DiscussionThere are many sources of market failure in health care that undermine the efficiency of chronic disease management. These include incomplete information as well as information asymmetry between providers and consumers, the effect of externalities on consumer behaviour, and the divergence between social and private time preference rates. This has seen government and policy interventions to address both market failures and distributional issues resulting from the inability of private markets to reach an efficient and equitable distribution of resources. However, these have introduced a series of policy failures such as distorted re-imbursement arrangements across modalities and delivery settings.SummaryThe paper concludes that market failure resulting from a preference of individuals for 'immediate gratification' in the form of health care and disease management, rather than preventative services, where the benefits are delayed, has a major impact on achieving an efficient allocation of resources in markets for the management of chronic diseases. This distortion is compounded by government health policy that tends to favour medical and pharmaceutical interventions further contributing to distortions in the allocation of resources and inefficiencies in the management of chronic disease.
Highlights
The increasing prevalence of chronic disease represents a significant burden on most health systems
Summary: The paper concludes that market failure resulting from a preference of individuals for 'immediate gratification' in the form of health care and disease management, rather than preventative services, where the benefits are delayed, has a major impact on achieving an efficient allocation of resources in markets for the management of chronic diseases
The World Health Organisation (WHO) in 2002 estimated that chronic disease would account for 72% of the global disease burden, with 35 million deaths or approximately 60% of total deaths worldwide attributed to chronic disease [2]
Summary
The increasing prevalence of chronic disease represents a significant burden on most health systems. Despite evidence of increasing prevalence of chronic diseases and ageing populations, health systems have supported reactive management to acute illness, injury and acute exacerbations of established diseases, rather than primary and secondary disease prevention [35]. Whilst health care markets are routinely described as not conforming to the conditions required for competitive markets, when analysing the competitiveness or features of separate markets within the health care system, there are differences with respect to the degree of divergence from the assumptions required for competitiveness. Such differences are especially apparent when comparing markets for acute health care to those for chronic disease management. Differences relate to the role of information, including the degree of information asymmetry between providers and consumers; and the role of intertemporal factors and the associated rate of time discount that create a wedge between individual and social preferences for health care
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