Health Policy: The Need for Governance

Abstract

Health policy must accept public control of the health care system, and the resulting political dilemmas, if the health cost crisis is to be resolved. Public governance is one way of achieving order and rationality in health—that is, controlling the health sector and allocating social resources to it optimally. These goals are not achieved now, because of a system of insured, fee-for-service financing, in which actors need not balance the overall benefits of care against their cost. In theory, control could be achieved by either delegating care and spending decisions to health professionals or by mar ket allocation. But for fundamental as well as practical reasons, neither of these mechanisms has restrained costs adequately. Hence, explicit public control seems inevitable. Federal health policy has moved toward it. Success will depend on resolving the resulting political tensions. Governance re quires continual wrestling with provider and patient inter ests in which there can be no clear standards for the correct course of action. Public control should be structured to facilitate resolution of these tensions. Public utility approaches tend to accord the providers too much autonomy; radical political reforms, too little. European experience suggests that a combination of central budget control with decentralized administration may be the best way to achieve order and rationality in health.