Chapter 2 An Overview of the Normative Economics of the Health Sector * * Helpful comments were received from R. Cookson, A.J. Culyer, J.P. Newhouse, T. Rice, T. Scott and G. Stoddart. I would like to acknowledge financial support of the Ontario Ministry of Health to the Centre for Health Economics and Policy Analysis.

This chapter provides an overview of normative analysis in the health sector in recent decades. It surveys two distinct, but related, literatures. The first is normative analysis of the operation of health care and health care insurance markets, market failure, and the scope for non-market institutional arrangements to improve the efficiency and equity of the financing, funding, organization and delivery of health care. The second is the debate …