Public and private roles in health: theory and financing patterns

Health systems are complicated in principle and extremely varied in practice, so it is not easy to reach conclusions about the appropriate role of the state in the health sector. Choices about the public role mean deciding what should be left to the private sector, how heavily those private sector activities should be regulated or otherwise influenced by public policy, and what activities are best dealt with by substantial government intervention such as direct provision of care, and mandatory health insurance coverage.

This paper, produced by the Health, Nutrition and Population (HNP) division of the World Bank, develops the arguments for intervention, shows their limitations and relates them to the instruments available to governments for affecting market outcomes. It examines how health care is actually paid for and provided in a large number of countries and how the level, composition and mechanisms of finance appear to affect health outcomes. The theoretical and empirical analysis leads to a consideration of why health systems have typically evolved in certain ways, whether it is consistent with the theoretically appropriate roles of the public and the private sector, and what strengths and failings different systems show.