The Political Economy of Health Care

Abstract

This article describes the role of government in the health care system and the factors and forces that determine how that role is played. It examines the application of theories of political economy drawn from both economics and political science to this sector. It discusses the implications of these theories for political choices including interest groups, voting behavior, and institutions. Governments play several roles in the health care system and focus on four broad categories of government action in health care markets, linked to corresponding market failures, namely, health care as a merit good; information gaps; infrastructure as a public good; and externalities. It explores the relevance of this literature to the health domain, and confirms the powerful influence of politics on the shape of the health system.