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Supply and Demand in Health Care Provision

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Is it possible to provide health care without rationing? In 1948 every household in Britain received a leaflet stating that the new National Health Service would "provide you with all medical, dental and nursing care. Everyone - rich or poor, man, woman, or child - can use it or any part of it. There are no charges, except for a few special items."

a) This pioneering system of health care provision, which celebrated its 60th anniversary in 1998, was based on the assumption that the quantity of health care that would be demanded at a zero price is finite. The quantity demanded nevertheless overwhelms the quantity supplied at the zero price in Britain and all the countries that subsequently initiated similar systems and found themselves confronted by shortages of health care services. How would a shortage show itself in such a situation?
b) If health care is made available to everyone at a zero money price, and at this price the quantity demanded exceeds the quantity supplied, how will heath care be rationed?
c) What system of rationing would you recommend?

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Solution Summary

The supply and demand in health care provisions are examined.

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a) The shortage of health care services shows up in Britain through the number of patients assigned to each doctor. England currently has 25,000 family doctors, and is facing a retirement crisis. England has a population of 53 million people. This means each doctor is responsible for roughly 2100 people. A shortage of family doctors means that the available doctors would be responsible for even ...

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