ABSTRACT
One cause of the bitter disagreement concerning organization of the medical care industry is a lack of consensus on the aims of such organization. The statement that access to medical attention should depend on medical need has an undeniable validity in certain contexts. The production of most goods and services is left to markets, at least in Western countries, and with good reason. It is widely acknowledged that market organization will produce, if not the optimum allocative results in many industries, at least tolerably good results—better in most instances than could be expected of nationalized industries. Apart from monopoly, externalities represent the oldest recognized form of market failure. While externality analysis and the possibility of monopoly are leading one set of critics to the conclusion that health care is underproduced by markets, the hypothesized presence of moral hazard leads another to the conclusion that markets overproduce care.
