Markets, information asymmetry and health care: Towards new social contracts

Abstract

This paper explores the implications of the increasing role of informal as well as formal markets in the health systems of many low and middle-income countries. It focuses on institutional arrangements for making the benefits of expert medical knowledge widely available in the face of the information asymmetries that characterise health care. It argues that social arrangements can be understood as a social contract between actors, underpinned by shared behavioural norms, and embedded in a broader political economy. This contract is expressed through a variety of actors and institutions, not just through the formal personnel and arrangements of a health sector. Such an understanding implies that new institutional arrangements, such as the spread of reputation-based trust mechanisms can emerge or be adapted from other parts of the society and economy. The paper examines three relational aspects of health systems: the encounter between patient and provider; mechanisms for generating trust in goods and services in the context of highly marketised systems; and the establishment of socially legitimated regulatory regimes. This analysis is used to review experiences of health system innovation and change from a number of low income and transition countries.

Introduction

In this paper, we examine health systems from the perspective of how access to competent health care can be secured in environments characterised by high levels of unorganised markets in health services and commodities, porousness of boundaries between public and private health care sectors and lack of state regulatory capacity. These environments increasingly prevail in significant numbers of low income and transition countries in Asia and parts of sub-Saharan Africa. As a result, there is now a considerable gap between normative accounts of how health systems operate and realities on the ground in the context of the increasing growth of markets in health care goods and services, particularly informal and unregulated ones (Bloom & Standing, 2001).¹ We argue that health systems are relatively path dependent and that institutional arrangements, which have evolved over a long time in one context, do not necessarily transplant well to different political economy contexts. Yet much of the textbook advice to developing and transition countries has recommended precisely that. In the introduction to this special issue, we noted that in many contexts, various sets of actors are finding their own way, introducing innovations involving different arrangements that better fit the realities they face. We, therefore, argue for a much stronger focus on understanding the institutional context and associated adaptations within which health systems operate in low income and transition countries.

In this paper, we employ the frame of the social contract to understand the transactions that underpin health systems. We focus particularly on the problem of information asymmetry and associated power relationships in the context of the growth of markets in health goods and services, as information asymmetries are seen particularly to characterise transactions in health care. We examine three relational aspects of health systems: the encounter between patient and provider; mechanisms for generating trust in goods and services in the context of highly marketised systems; and the establishment of socially legitimated regulatory regimes. We use this analysis to review experiences of health system innovation and change from a number of countries.