Allocating Health Resources

Abstract To clarify the polemics surrounding public and private responsibilities in health care, this article deals with the economic justification for the commitment of public resources. Public health measures do possess the properties of public goods or physical externalities, and yet may not have the sufficient conditions for allocating resources by political procedures. To publicly allocate resources to personal health care can only be justified by the properties of informational externalities, or regard for the humanitarian spillovers. Paradoxically, it is precisely in this latter area that a concern about minimum standards has led to a philosophical commitment to achieving maximum standards. The pursuit of such universal standards in the health sector has been the subject of growing disquiet. This dilemma is best resolved by reorientating the role of government towards an analysis of the costs and benefits of present and projected health practices.