What are your thoughts on the degree to which the assumptions made regarding the perfect market apply to health care? Please provide examples of why you feel they do or do not apply.© BrainMass Inc. brainmass.com October 25, 2018, 9:54 am ad1c9bdddf
A market that meets all conditions for efficient resource allocation is a perfect market (Mwachofi & Al-Assaf,2011).Consumers will pay the lowest price while producers will sell at the highest price possible; the equilibrium price and quantity are determined when the quantity demanded and supplied reaches an equilibrium(Barr,2004). In a perfect market there is efficient resource allocation guided by the "invisible hand" (Smith, 1976).
Perfect markets are not common as most markets fail to meet the necessary conditions for a perfect market ((Smith, 1976).).Markets can fail to correct by themselves and may require interventions from outside the market.
Healthcare does not meet the perfect market conditions that facilitate proper resource allocation because of the nature of the product and service involved.
There are several markets which are interdependent in health care. Education, manpower, institutional, pharmaceutical and insurance is some of the markets involved. Most of these markets again do not meet the perfect market conditions.
There are some conditions that favor a perfect market; when one considers the market structure, perfect competition favors perfect resource allocation. But when it comes to health care, there are barriers to perfect competition. There are entry and exit barriers like licensing, training and investment. This can protect inefficient producers. ...
The paper describes the assumptions of a perfect market as applied to the Health care industry
Political Process, Solidarity, Actuarial Fairness
In a paragraph format:
1. Please identify and describe in detail the steps involved in the political process
a. Each step has its own specific characteristics, provide examples of each.
2. Please explain the concept of actuarial fairness and present an argument in support of that position
3. Please explain the concept of solidarity principle and present an argument in support of that position
4. Discuss how the concept of actuarial fairness has historically been put into practice
5. What is the logic behind the market?
6. What is Welfare loss?
7. Discuss the assumptions of the ideal market and how they relate to the healthcare market
8. Identify and explain the two basic theories of motivation for regulation
9. Identify and describe the ways in which government can intervene in an imperfect market
10. Please identify and describe the two fundamental policy positions when making decisions in an imperfect market. Compare and contrast positions.