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Examine the reasons why the government intervenes in the provision of National Health and Education.

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Introduction

Examine the reasons why the government intervenes in the provision of National Health and Education. Both National Health care and Education are considered to be merit goods. This means that not only are they a basic human right but also, a service or good that has varying positive externalities associated with it. (Important to define both merit good and positive externality at this early stage) Without government intervention in healthcare, this sector would be a free market and so everything would have to be purchased straight from the source (i.e. doctor's surgery or hospital) also if this system was to work then people would have to take out private health policies from insurance companies so that they may be able to pay for all the medical treatment needed in their lives. An example of where healthcare is provided in a free market is the US; as a result, nearly 40 million citizens have no access to healthcare. ...read more.

Middle

These both defeat the purpose of insurance, as the people who need it may not be granted access to it either because their attempt to purchase it is denied or else to not because the premiums are too high for the consumer to afford. This is particularly true of elderly consumers, whose needs are on average significantly greater, and whose means might well be considerably less. By having government intervention equity is created; this means that people are treated equally on the basis of need, not depending on how wealthy they are or on their income. The potential issue of richer consumers being able to jump the queue is also reduced. By having the government providing national health instead of many small private companies, there will be the benefit of economies of scale. This means that the average cost for treatments and the purchasing of drugs will decrease, and so the scarce resources would also be used more effectively. ...read more.

Conclusion

By having government intervention, there is a choice of private or state schools which would force private schools to keep relatively low prices otherwise they will lose attraction from consumers who would change to state schools. This will keep healthy competition between the different private schools, and between both sectors. As national education is accessible to both rich or poor, this will help to create equity. By having state education, but also, making it law that everyone must have some education (in the UK up until GCSE's), this will have many positive externalities of making the country's economic growth increase as well as the increased productivity of the country, the internal and external trade, as well as increase of overall wealth of the country. This also helps to reduce the inequality of people within the country so that the income/wealth distribution is less wide. This is because everyone has basic education, and become increasingly employable, being able to get good jobs in order to earn more. AJThompson ...read more.

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