Market failure and its consequences are some of the neo-liberal arguments for government intervention in the health and indeed other sectors. Evident in the flaws in many health systems worldwide are for sure, problems relating to market malfunction. To simplify the nature and scope of government intervention, considering the variety of services that the health sector offers, suggestions have emerged of taxonomy of services based on their economic attributes. An example of such classification is Musgrove’s triad1, namely public goods such as immunization; low- and high-cost-intervention such as the treatment of common cold, and of cancer, respectively.
According to Musgrove, government should fund in full public goods-types of services, and with regard the low-cost intervention group, regulate insurance to make services equitable and accessible, and for the high-cost intervention service, added to regulation, supplement funding for the underprivileged. What do recent news reports2 that pediatricians in the U.S are angry over the costs of vaccines say about concerns over market failure, and the need for government intervention? Is Musgrave right, for example, which implies government funds vaccinations in full?
This question is pertinent considering as the pediatricians noted the increasing costs and numbers of new vaccines making buy shots to give their patients a chore, insurers meanwhile, curtailing reimbursement. With the doctors sometimes losing money on the vaccine that they give their patients, some no longer offer the most up-to-date and costlier vaccines. These developments could no doubt, have adverse consequences for the country’s immunization program, compromising efforts to prevent an avian flu pandemic for example, and fostering the re-emergence of preventable diseases that vaccinations hitherto eradicated.
Gardasil, the new vaccine that prevents cervical cancer costs $360 for three shots, and RotaTeq shots, the vaccine that prevents rotavirus-type diarrhea-diseases costs, $190, in the U.S., both some doctors stopped offering their patients. So then, it is all about money, a classical example of the market failure that neo-liberals invoke to call for government intervention, which many already have started to do, citing other countries where immunization is in fact a public health service. To be sure, in the U.S. 85% of children, receive all, or some of their immunizations from fee-paying private doctors’ offices, although federal/state governments subsidize those for nearly 55% of children, typically the underprivileged, incidentally also given by private physicians, who have been so doing ever more since the measles outbreak in 1989.
It should hardly be surprising that the call for a reversal of the immunization program back to the public health departments in the U.S becomes louder progressively. Given that the immunizations a child needed in 1980, seven shots and four oral doses, cost just about $23, or, inflation-adjusted, $59, but now the average cost of all the 37 shots and 3 oral doses recommended vaccines by age 18 years is at least $1,6002, the public needs answers, urgently too, although it is uncertain wherefrom. Federal spending, for example, on the vaccines for children program targeting Medicaid children in particular was $500 million in 2000, and is now $2.5 billion. Furthermore, with states, such as North Dakota, which vaccinated children free, no longer, and the country’s health spending soaring, now $2.1 trillion/year, or 16 cents/dollar, and estimated to double over the next ten years to over 4 trillion dollars per annum, 20 cents/dollar expended on healthcare by 2016, 19.6% of GDP3, the picture is anything but rosy.
If the market had failed, and government was committed to its brows in health spending, wither immunization, and are we now at the mercy of some darned bug we cannot even see? This issue highlights the profound nature of the larger ones that challenge healthcare delivery not just in the U.S., but worldwide in contemporary times, for example, the assumption that there are universal models to conceptualize the nature and extent of government involvement in the health, and indeed, other sectors. Whereas it is in fact evident thereof also that we need to, for instance, explore the appropriate ways to rectify market failure, in this case, regarding vaccines, rather than merely switch from the private to the public sector.
In this context, we also need to consider the prospects of having the vaccines at affordable prices, yet a significant number of parents refuse to have their children inoculated for a variety of reasons, a situation, which simply switching the source of vaccine would clearly not remedy. Thus, in general, we need to adopt a comprehensive approach to addressing the myriad of problems that our health systems face, including for example, recognizing the importance of rectifying information asymmetry in particular in modifying appropriately the entrenched attitudes that could negate the potential of whatever reform efforts we introduce into our health systems.
1. Musgrove, P Public and Private Roles in Health: Theory and Financing Patterns. World Bank Discussion Paper No. 339, World Bank, Washington DC. 1996
2. Available at: http://www.nytimes.com/2007/03/24/business/24vaccine.html?_r=1&ref=health&pagewanted=print Accessed on
3. Poisal JA, Truffer C, Smith S, Sisko A, Cowan A, Keehan S, Dickensheets B. Health Spending Projections Through 2016: Modest Changes Obscure Part D's Impact. Health Affairs, doi: 10.1377/hlthaff.26.2.w242 (Published online