Answer the following 2 questions seperately Assignment

Answer the following 2 questions seperately - Assignment Example On the other hand, public interest theory asserts the need to keep prices at reasonable rates so that more people can access healthcare services; and that more readily and cheaply. As such, the government should intervene to ensure that the best interests of the society are served. In this light, there is the push to have the government inject and nurture competition, liberalize information, assuage externalities and to address market failures (Sirgy, Dong-Jin & Yu, 2011). Public interest theory is the most plausible and tenable of the two, since healthcare market primarily discharges public or social goods. Healthcare is too sacrosanct to be given an economic laissez faire. Likewise, it is very inappropriate and unfortunate to create a situation in the healthcare system where the public bears the burden of operational inefficiencies as players in the business (pharmaceutical and insurance companies, and healthcare institutions) rake profits. If the system that is envisioned by the special interest theory must be adopted or tolerated, healthcare systems must be exempted from such contriving. Imperfect information refers to a situation where the client or the seller does not have partial or full information that may affect their decisions. For instance, in a perfectly competitive market, though healthcare services insurers are entitled to full information pertinent to clients’ health status so that they can subsequently exact premiums in light of the expected costs, some clients will reserve themselves from detailing all the crucial information. Again, these clients may deliberately or inadvertently give inaccurate details. Most of the time however, clients will knowingly withhold information or give incorrect details to escape higher insurance premiums. The import of this development is that it often paves way for market failure, since the giver of the inaccurate or incomplete