Market failure, policy failure and other distortions in chronic disease markets.
BACKGROUND
The increasing prevalence of chronic disease represents a significant burden on most health systems. This paper explores the market failures and policy failures that exist in the management of chronic diseases.


CONCLUSIONS
There are many sources of market failure in health care that undermine the efficiency of chronic disease management. These include incomplete information as well as information asymmetry between providers and consumers, the effect of externalities on consumer behaviour, and the divergence between social and private time preference rates. This has seen government and policy interventions to address both market failures and distributional issues resulting from the inability of private markets to reach an efficient and equitable distribution of resources. However, these have introduced a series of policy failures such as distorted re-imbursement arrangements across modalities and delivery settings.


CONCLUSIONS
The paper concludes that market failure resulting from a preference of individuals for 'immediate gratification' in the form of health care and disease management, rather than preventative services, where the benefits are delayed, has a major impact on achieving an efficient allocation of resources in markets for the management of chronic diseases. This distortion is compounded by government health policy that tends to favour medical and pharmaceutical interventions further contributing to distortions in the allocation of resources and inefficiencies in the management of chronic disease.
Watts
Jennifer J
JJ
Centre for Health Economics, Monash University, Building 75, Melbourne, Australia. jenny.watts@buseco.monash.edu.au
Segal
Leonie
L
D002908:Chronic Disease / Q000453:epidemiology*; D003132:Commerce / Q000191:economics; D003363:Cost Control; D019468:Disease Management; D005380:Financing, Government / Q000191:economics; D014943:Global Health; D017048:Health Care Costs; D015276:Health Care Rationing / Q000191:economics; D019981:Health Care Sector / Q000458:organization & administration; D005102:Health Expenditures / Q000639:trends; D006291:Health Policy; D006297:Health Services Accessibility / Q000191:economics; D006301:Health Services Needs and Demand; D006302:Health Services Research; D006801:Humans; D007348:Insurance, Health / Q000191:economics; D015995:Prevalence; D011320:Primary Health Care / Q000191:economics