Intervention Strategy

There are five basic ways in which government can correct market failures and ensure equity: inform, regulate, mandate, finance and deliver health care services. Although these approaches are not unique to health care and are typical of government involvement in other sectors also, the involvement in health is typically extensive and employs all five of these approaches. Government  informs by educating the masses through health promotion campaigns or dissemination of knowledge on health services through programmes like mass immunisation (e.g. campaign of pulse polio, HIV).

Government  regulates by legislation or executive order, as for instance, by restricting availability of antibiotic to correct negative externalities such as microbial drug resistance or by licensing providers and insurers to reduce induced demand by unscrupulous practitioners from doing unnecessary tests. Mandate is also specified by law but unlike regulations they involve performance. Epidemiological surveillance reporting by hospitals and employee insurance benefits are examples of mandate designed to promote public interest. Financing public health campaigns such as for diagnosing TB and providing treatment for immunisation are examples of correcting externalities. Research and development is another type of public good that is generally financed with public funding. Once the government decides to finance a health service, the subsequent choice is whether it will also deliver.

The delivery can be through a whole range of services from preventive to curative care. If the government is to act as a provider of health services, it should do so only if it can function more effectively than the private sector. Government provision often occurs when there is no alternative source of delivery as, for example, services in remote rural areas where it is unlikely that there will be private capital or demand to support private initiatives.