Intended for healthcare professionals


Health systems should be publicly funded and publicly provided

BMJ 2018; 362 doi: (Published 10 September 2018) Cite this as: BMJ 2018;362:k3580
  1. Neena Modi, professor of neonatal medicine1,
  2. Jonathan Clarke, clinical research fellow2,
  3. Martin McKee, professor of European public health3
  1. 1Imperial College London, Chelsea and Westminster campus, 369 Fulham Road, London SW10 9NG, UK
  2. 2Centre for Health Policy, Imperial College London, UK
  3. 3London School of Hygiene and Tropical Medicine, London, UK
  4. Correspondence to: N Modi

A market in healthcare increases the likelihood of inequity and exploitation, with suboptimal care for both rich and poor, say Neena Modi and colleagues

In a publicly funded health system such as the NHS, does it matter whether care is provided publicly or privately? Here we discuss evidence relevant to this question. Definitions of what we mean by “public” and “private” are found in box 1.

Box 1


  • Publicly funded—paid for out of the public purse

  • Publicly provided—delivered by a public sector workforce, in facilities that are managed and owned by public sector organisations

  • Privately funded—paid for directly through out-of-pocket payments, indirectly through insurance, or by charity

  • Privately provided—services that are managed and owned, or a workforce that is employed by, a for-profit organisation, not-for-profit social enterprise or charity; or a self employed workforce


Market mechanisms

At the heart of the question of who should provide health services is their commodification, through the application of market mechanisms, so that healthcare is regarded as a product to be bought and sold. Arguments about markets as a means of delivering healthcare were set out as long ago as 1963 by the Nobel laureate Kenneth Arrow.1 In his landmark paper Arrow said that the medical care market had failed because healthcare is not a simple product, like a box of screws, but is complex and subject to major information asymmetries as the healthcare professional will usually know more than the patient. This opens up the possibility of exploitation on many levels, with potential for adverse consequences, including iatrogenesis, as described by Ivan Illich2 in relation to excessive or inappropriate use and as set out by Julian Tudor Hart in his “inverse care law” relating to underuse: “The availability of good medical care tends to vary inversely with the need for …

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