Economics of Health Care Practice Test 2025 – Comprehensive All-in-One Guide for Exam Success!

The primary role of government intervention in health care markets is to correct market failures and ensure equity. This is essential because health care markets often experience issues such as information asymmetry, monopolistic practices, and externalities that can lead to inefficiencies and inequitable access to care.

For instance, in a perfectly functioning market, consumers would have complete information about services and prices. However, in health care, patients often lack the necessary knowledge to make informed decisions about their care. This disparity can lead to suboptimal health outcomes and increased overall costs. By intervening, the government can provide regulations and guidelines to create a more balanced environment.

Additionally, government involvement aims to promote equity in access to health care services. This could mean implementing policies to support underserved populations or ensuring that no one is denied essential health services due to their financial circumstances.

In contrast, the alternatives—reducing competition among providers, increasing profits for healthcare companies, or limiting patient access—do not align with the public health goals of improving overall health outcomes and ensuring that health care is accessible and affordable to everyone. These approaches could exacerbate existing problems rather than remedy them, further highlighting the importance of effective government intervention in addressing the complexities of health care markets.