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The Government and the Private Market in Health Care
Book chapter

The Government and the Private Market in Health Care

Mother of Invention
29 Nov 2013

Abstract

Tax subsidy Hospitals Medicare Health care employment Medical Profession National Institutes of Health Medicaid Food and Drug Administration Pharmaceuticals Health Insurance
The American health care system, which appears on its surface as a predominantly private endeavour, actually rests on a foundation of government support. Itreflects a huge public-private partnership that drives one-sixth of the economy. Four key sectors poignantly demonstrate this dynamic. Pharmaceutical manufacturing depends on the National Institutes of Health for research funding and on the Food and Drug Administration for public reassurance of safety. The hospital industry depends on Medicare for a large share of its revenue. The medical profession garnered public trust from regulatory oversight that it developed in collaboration with state governments, and many specialties rely heavily on Medicare for reimbursement. And private insurance companies depend on a huge tax subsidy for employment-based policies and on opportunities to administer coverage under Medicare and Medicaid. The public-private relationship is complex with industry segments routinely capturing their regulators, yet it represents the system’s defining economic paradigm.

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