Is the free market system compatible with our health system?<\/p>\n
M. Iqbal Mochtar, Ministry of Health, Makassar, South Sulawesi<\/p>\n
In an international survey conducted to measure the health
\nsystem in 191 countries, Indonesia's health system was
\ncategorized as bad and was among the worst in Southeast Asian
\ncountries. Health experts here have blamed many factors
\nattributed to the centralized health system.<\/p>\n
Some of them raise the need for a free-market system to ensure
\nthe best delivery of health care services, given its efficiency,
\nequity and equality. A free market would mean that both health
\ncare providers and patients would seek and compete with each
\nother to get the best value for their money.<\/p>\n
Hospitals should be free to determine the cost of their
\nservices, doctors fix their standard consultation fees and
\npatients deserve the right to go to any hospital or doctor
\naccording to their preference. Given the nature of competition,
\nhealth care providers try to provide efficient services and
\nprices.<\/p>\n
However, there are some likely fallacies underlying this pro-
\nfree market notion.<\/p>\n
In a competitive market, income distribution is determined by
\ntwo factors: The workers' salary and their skills. Yet, these
\nfactors may vary widely from person to person. Every worker
\ncertainly has their own knowledge and ability, and thus each
\nreceives a different salary. As a result, the unequal
\ndistribution of income can be observed in everywhere,
\nparticularly in a developing country like Indonesia.<\/p>\n
In the health sector, unequal distribution of income usually
\nbenefits those who are better off, as they are much more likely
\nto be able to afford health care than the poor. The more
\nexpensive the health care, the larger the discrepancy between the
\nrich and poor in their access to health services.<\/p>\n
The free market mechanism cannot easily be applied to the
\nhealth sector because the categories of health care are broad and
\nvaried, particularly in developing countries. Some curative
\nmedical services and medicines are categorized as private goods,
\nwhile most public health programs are public or \"merit\" goods --
\nthe latter refering preventive programs such as vaccination.<\/p>\n
The free market system is likely to be applicable to private
\ngoods only. In Indonesia, however, the need for public and merit
\ngoods have remained substantially higher than the need for
\nprivate goods. The number of people needing free clean water and
\nimmunization is considerably higher than the need for plastic
\nsurgery and weight-reduction programs. As a result of this
\ndiscrepancy in health needs, the government is required to keep
\ncontrol over the availability of public and merit goods.<\/p>\n
The government's interference under such conditions would
\ndisrupt the significant role of price as a result of the
\nrelationship between supply and demand, which means that the free
\nmarket system cannot function in this particular situation.<\/p>\n
Another argument against the free market system in the
\nprovision of health care is that the nature of health needs may
\nsimply not be viewed in the same way as with other goods and
\nproducts. Health is one of the most valuable things an individual
\nhas, and therefore, the quality of health demanded cannot be
\njustified simply by pricing and market equilibrium. Patients do
\nnot have alternatives to health or life. This is not the case
\nwith other goods, such as chocolate or butter.<\/p>\n
To be efficient, the free market system requires both
\nproducers and consumers to have adequate knowledge regarding the
\ngoods on offer in order to make a rational decision in selling
\nand buying goods. In the health sector, particularly in
\ndeveloping countries like Indonesia, however, this requirement
\ndoes not seem to be fulfilled.<\/p>\n
Health care providers surely have a much more superior
\nknowledge than patients in terms of health care services. Thus,
\nhealth care providers have an advantage and may perform any
\nhealth treatments they choose -- for whatever benefits -- while
\npatients are mostly dependent on their providers' discretion.
\nThis amounts to inefficiency in a free market system.<\/p>\n
The advantages of a free market system -- minimizing complex
\ncosts of administration and bureaucracy -- occurs in an
\nenvironment of real competition.<\/p>\n
Like the governments of many countries, the Indonesian
\ngovernment is currently examining which health care system is
\nmost compatible with the conditions here. But nowadays, given the
\nparticular circumstances of a developing country, the health
\nsector cannot rely on a single system, whether a free market or a
\ncentralized system.<\/p>\n
A combination of the two systems may provide the flexibility
\nnecessary to achieve efficiency. In a combined system, the
\ngovernment may control the market to maintain efficiency, while
\nit must control the price of health care provision relative to
\nconsumption through the direct and free provision of certain
\nhealth services. It also needs to control the behavior of health
\ncare providers through appropriate legislation.<\/p>",
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