From Trust to Political Power: Interest Groups, Public Choice, and Health Care

From Trust to Political Power: Interest Groups, Public Choice, and Health Care Page 1145 Mark A. University of California, Los Angeles In 1963 Kenneth Arrow offered a simple empirical observation that suggested a core impediment to the effective functioning of market arrangements in health care. “Because medical knowledge is so complicated,” he noted, “the information possessed by the physician as to the consequences and possibilities of treatment is very much greater than that of the patient, or at least it is so believed by both parties” (951). According to Arrow, however, society found a way to manage this information asymmetry that would otherwise leave people vulnerable to suboptimal decision making and exploitation by the suppliers of medical services. “Delegation and trust are the social institutions designed to obviate the problem of informational inequality” (966). According to this reasoning, we make efficacious choices by permitting our physicians to both define the choice set of the various treatment options and weight their expected values. We feel comfortable delegating a significant chunk of our decision-making sovereignty regarding medical care because of the trust we have in our physicians. But in Arrow’s framework, why does this dyadic trust emerge in which we place such faith, given the lack of a formal instrument for insuring http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Health Politics, Policy and Law Duke University Press

From Trust to Political Power: Interest Groups, Public Choice, and Health Care

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Publisher
Duke University Press
Copyright
Copyright 2001 by Duke University Press
ISSN
0361-6878
eISSN
1527-1927
D.O.I.
10.1215/03616878-26-5-1145
Publisher site
See Article on Publisher Site

Abstract

Page 1145 Mark A. University of California, Los Angeles In 1963 Kenneth Arrow offered a simple empirical observation that suggested a core impediment to the effective functioning of market arrangements in health care. “Because medical knowledge is so complicated,” he noted, “the information possessed by the physician as to the consequences and possibilities of treatment is very much greater than that of the patient, or at least it is so believed by both parties” (951). According to Arrow, however, society found a way to manage this information asymmetry that would otherwise leave people vulnerable to suboptimal decision making and exploitation by the suppliers of medical services. “Delegation and trust are the social institutions designed to obviate the problem of informational inequality” (966). According to this reasoning, we make efficacious choices by permitting our physicians to both define the choice set of the various treatment options and weight their expected values. We feel comfortable delegating a significant chunk of our decision-making sovereignty regarding medical care because of the trust we have in our physicians. But in Arrow’s framework, why does this dyadic trust emerge in which we place such faith, given the lack of a formal instrument for insuring

Journal

Journal of Health Politics, Policy and LawDuke University Press

Published: Oct 1, 2001

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