Distribution of Health Care

Originally written in 2007 as a paper in a course in Bioethics. Revised for clarity.

In this post I will look at distribution of health care. In western societies, the invisible hand of Adam Smith is usually considered the best way to distribute goods. In this post I will explain why that is not the case in distribution of health care and look at few issues that need to be considered when looking at health care distribution and prioritization in health care.

As the cost of health care started to escalate in the last three decades of the 20th century the issue of what to do and for whom became one of the most difficult question concerning health services. The reason for the escalating cost was partly due to an emphasis on cure instead of care during the sixties and seventies. (Callahan 18)

I use examples from two countries, Iceland and USA. I am aware of the differences between those countries. Iceland is a monoculture state with 1000 times fewer inhabitants than the multicultural USA. However, it is not obvious that small is better when it comes to efficiency and effectiveness of health care, as smaller countries do not have the same ability to rationalize as a more populated one.

Market failure

The fall of the Berlin Wall marked the victory of the invisible hand of the free market. In the spirit of ABBA, we tend to think that “The Winner takes it All” and when we speak about distribution it is proper to begin by looking for the answers from the invisible hand of the market.

Mankiw writes in his textbook on Economics that in this case the winner does not take it all. The main failures of the free market are three, and it can be argued that all are closely connected to the issue of health care distribution.

The first failure is the one of externality, when one person’s actions affect the well being of a bystander. Our health is affected everyday by decisions we are not able to respond to.

Another flaw is the blindness of the market towards justice. The invisible hand does not ensure that everyone has sufficient food, decent clothing, and adequate health care. (Mankiw 11)

The third failure of the invisible hand is market power. This failure is often connected to monopoly but it applies as well when either provider or customer lack knowledge. Outka points out that health care has no real trade-offs. The free market for health service is non-existent; the customer/patient has no choice other than buy the service. Even in a competitive society with enormous choices of hospitals one’s knowledge of one’s own needs is based solely on the provider’s information. The possibility of shopping around is also often limited by the conditions of the customer. (Outka 21)

Good example of how market power affects the free market of health care can be found in the privatized system in USA. The question about rising health care cost was partly solved by health management, which was aimed at minimizing cost and at the same time maximizing profits for shareholders of insurance companies. In a way this health management system used the market failure of lack of trade-offs to maximize the profits of shareholders and left the customers out in the cold with unsatisfactory service and nowhere to turn.

“The truth is,” declared James Madison, “that all men having power ought to be distrusted.” The history of nations bears testimony to the truth of that observation, as we have seen; and it is the perennial error of moralists that they do not recognize its validity. (Niebuhr 164)

Even though Madison probably was talking about governmental power, it must be recognized that market powers have the same affect.

Another effect of market failure concerning health care is how competition among providers for elderly care leads to raising costs, not reduced as commonly expected in economics. (Callahan 125) Similar increase in cost seems to happen in other systems where the invisible hand is used to control needs that have no real trade-offs; for example water, electricity, and telephone service.

It is therefore easy to conclude that the invisible hand of the free market is not helpful for health care distribution due to the market failures mentioned above. The externalities and the unbalanced market power make the invisible hand paralyzed at best, even thought we would leave out questions whether it is acceptable that the health care distribution of the invisible hand might be unfair.

Health as Grace

When addressing the issue of health care, it is vital to answer questions about justice and grace, or more specifically whether health is a gift or a right of human beings. Here it may look like Christian Ethics have a dilemma. As we understand our life and potentials as God’s gifts it might be difficult for some Christians to explain that health is a right for all to proclaim.

We have previously suggested that philanthropy combines genuine pity with the display of power and that the latter element explains why the powerful are more inclined to be generous than to grant social justice. (Niebuhr 127)

It is at least possible to recognize among some Christians an understanding of God as all powerful, distributor of grace and goods similar to the philanthropists who are considered more generous than just. Against this all powerful and selective God, we have the “New Testament witness that point to the fact that the objective of God’s love is unity and community in every dimension of human existence.” (Childs 42) As the Scriptures can be quoted numerous times as claiming God as just, I will next look at how justice can affect our understanding of health care, but will leave grace till later.

Health as Justice

The most common form of hypocrisy among the privileged classes is to assume that their privileges are the just payments with which society rewards specially useful or meritorious functions. (Niebuhr 117)

Gene Outka addresses the question of equal access to health care and asks if “something for nothing” is necessarily unjust. He rejects in his writings that health crisis are meritarian in nature as reasons for them are often beyond our control. (Outka 14-15) He goes on and says:

When people are equal in the relevant respects – in this case when their needs are the same and occur in a context of random, undeserved susceptibility – that by itself is a good reason for treating them equally. (Outka 15)

But this leaves us with some issues. What if a person contributes to his health problems with irresponsible behavior. In dealing with this the public health care system in Norway has tried to put those who are considered responsible for their own health problems lower on waiting lists. (Gunnarsdóttir 5)

Gene Outka replies and claims it is impossible to come to a final conclusion about who is in fact responsible. James Childs points out that according to many health professionals the misuse of chemicals is a disease in itself and therefore it is difficult to make one wholly responsible for being ill, due to misuse. (Childs 134)

Health as Need

The question of needs arises if we assume that a human being has a right to health but is not solely under God’s grace.

Outka distinguish between essential needs and felt needs in his discussion about distribution of health care. According to him essential needs should not be considered something that people need to acquire, but have a right to gain. (Outka 22) The question then becomes what are essential needs and which needs are felt needs.

Abraham Maslow introduced the theory of hierarchy of needs in 1943. According to his theory there are five hierarchical categories of needs. Lower categories have to be met before we can fulfill those higher in the pyramid. Lowest in the pyramid are the needs to eat, drink, sleep and engage in sexual activity. The next category contains the need for safety. There, Maslow puts security of revenues and resources, Family security, Security of health and Security of personal property against crime. (Maslow)

Some Human Rights covenants in the 20th century have tried to name those essential needs, using lists similar to Maslow’s. Many lists name as the essential needs, those that are on Maslow’s lowest two categories.

International Covenant on Economic, Social and Cultural Rights claims in article 12 that the states parties of the covenant should create conditions, which assures medical service to all in event of sickness. The Universal Declaration of Human Rights talks about equal access to public service for everyone in article 21 and in article 25. It talks about the right to a standard of living adequate for the health and well-being for himself and of his family, including medical care. It also claims a right to security in an event beyond one’s control, for example in case of sickness.

Health and scarcity

If we are able to agree that everyone should receive according to essential needs we face the question: What if we must choose one patient over another due to scarcity?

Daniel Callahan opened the question about choosing patients for treatment in his book Setting Limits 1987. Callahan uses the concept of natural and fitting lifespan, as a means of deciding who should receive help and who should not. (Callahan 53) He defines natural life span “as one in which life’s possibilities have on the whole been achieved and after which death may be understood as a sad, but nonetheless relatively acceptable event.” (Callahan 66) Callahan rejects the notion that limiting health care for those who have lived a natural life span symbolizes abandonment. The opposite should be true as the elderly would be able to life their remaining years in an honorable and bearable way (Callahan 148).

One of Callahan’s arguments for the necessity of limiting health resources to the elderly is that “the government cannot be expected to bear, without restraint, the growing social and economic cost of health care for the elderly.” The reason for this, according to Callahan, is that the cost will continue to escalate and finally become unlimited. As the government has obligations to other age groups as well, the resources to the elderly most be limited. He continues and claims that even though the resources would in fact be unlimited it would be wise to set boundaries as it would lead us to gain some deeper truths about living a good life. (Callahan 116)

The problem of giving the elderly a social purpose seems to be another of Callahan’s problems. (Callahan 37)

Outka quotes Paul Ramsey, which rejects any categorization when it comes to choosing which patients are cared for. Ramsey’s argument is based on

the equal right of every human being to live, and not relative personal or social worth, should be the ruling principle. (Outka 16)

According to Ramsey the only valid criteria to choose between patient for a person who believes in equality of all persons before God is a random choice. (Outka 16)

The Icelandic Government has taken a clear stand in line with Ramsey’s ideas and has in fact gone further, rejecting the need for choices at all. According to Icelandic Laws every resident in the country has equal right to health care. It is illegal to look at gender, religion, opinions, country of origin, race, color, economical status, family connections or any other aspect when a decision is made about treatment. Every patient has a right to the best medical care available at any given time. The availability is partly connected to economic situation in the society as a whole and existing knowledge in the health care system, but it is also stated in the law that patients can go abroad for treatment if a satisfactory treatment is not available in Iceland. The cost is to be paid by the public health insurance. Limitations in health service are rejected, as it is understood to be an absolute right of every individual to be as healthy as possible at any given time. It is though right to mention that the law states that treatments to delay death but not to prolong life are not acceptable. (Lög um réttindi sjúklinga)


According to International Covenant on Economic, Social and Cultural Rights all peoples have a right of self-determination. There is a fear (f.x. in the US concept of death panels) that a public health care could lead to a loss of autonomy. However, autonomy is considered one of the most important aspects in the relatively new patient law in Iceland. According to the law a patient has a right to get information about anything concerning his treatment, and has the right to ask for and get an opinion and/or treatment from another health care employee/doctor. The patient has also the right to refuse to get any information about his health and treatment if he prefers. A patient can refuse treatment, and is allowed to do so. This right is not absolute and the law state that if there is any doubt as of the will of the patient a treatment is given. (Lög um réttindi sjúklinga)

If people were both finite and sinful as most Christians would claim, the principle of autonomy must be considered in light of that and be under constant criticism of the Christian understanding of love. (Childs 124)

The issues of autonomy are not always easily solved in regards to morally debatable issues. The question rises whether patients should be allowed to decide about procedures that affect other than him/her self, as in the case of abortion.

The readiness to accept a child we know will be born with a genetic defect such as Down Syndrome or cystic fibrosis or spina bifida is finally not a matter simply of rational argumentation, as we have observed, but a matter of readiness to live in love with those who suffer, to embrace the promise and the possibility of Jesus’ beatitude: “Blessed are those who mourn.” (Childs 160)

We can ask if parents should be told if their child is likely to be born with Down Syndrome or other birth defects. In those cases Icelandic laws states it clearly that parents have a right to know everything that a doctor knows, and are alone responsible for deciding whether abortion should be performed.


A former Minister of Health in Iceland celebrates the rising cost in health care and points out that everything has gotten better in the health care system, houses, equipment, knowledge and understanding about self-determination. All this has led to more cost, but at the same time to a better life for many. (Pálmadóttir 3)

In 2003 the combined health expenditure per capita in public and private sector was 83% higher in USA than in Iceland. When looking only at the public health care cost the Icelandic government spends only 16% more than USA. (Human Development Report)

When we consider these numbers, keeping in mind that the life expectancy in Iceland is at least 2 years higher then in the States, the infant mortality rate (per 1000 live births) is 350% higher in the States than in Iceland, and the probability of surviving to age of 65 is around 5% higher in Iceland (Human Development Report) it seems that the free market system in the States is to say at least very ineffective.

The decision to make public health care available to everyone at any cost seems to more effective and less expensive than the attempts to create a system where the market failures are fixed. The difference between public health care cost between the two countries mentioned above implies as well that the cost of expanding the public health care so it is accessible to all Americans does not necessarily have to be more expensive than the public health care system in the States today.

The Icelandic model also reminds us that public health care for everyone, without limitations is possible. The cost of health care keeps rising, not only due to more expensive treatments but because of more demands on behalf or by patients. At the same time the welfare not only of the patient but his/her intimate family is at stake. The society as a whole loses when families become dysfunctional due to unaddressed health issues. The stress level of a society that fails to fulfill Maslow’s security needs leads most likely to lower productivity and lower creativity.

Finally one could ask about the philanthropists and the church. With a public health care, are we removing their opportunity to do good? Childs quotes George F. Thomas and reminds us that social justice can never express unconditional love, justice is about the general or common goods but can not take fully into consideration the special needs of each and everyone. (Childs 97) This reminds us that even though we come to the conclusion that everybody should have full access to the best health care possible we are still left with numerous questions. Some of those questions are technical, other are questions of grace and love that can only be answered by individuals and groups dedicated to do good.


Callahan, Daniel. Setting Limits. Simon and Schuster: New York, 1987.

Childs, James M. Ethics in the community of promise: faith, formation, and decision. Augsburg Fortress: Minneapolis, MN, 2006.

Gunnarsdóttir, Guðrún Þórey. Staða forgangsröðunar í heilbrigðismálum í nokkrum löndum. Heilbrigðis- og tryggingaráðuneytið: Reykjavík, 2000.

Human Development Report. 2007. United Nations Development Programme. July 27, 2007. – http://hdr.undp.org/

International Covenant on Economic, Social and Cultural Rights. Office of the High Commissioner for Human Rights. July 27, 2007. – http://www.unhchr.ch/html/menu3/b/a_cescr.htm

Lög um réttindi sjúklinga. Heilbrigðis- og tryggingaráðuneytið: Reykjavík, 2000.

Mankiw, N. Gregory. Principles of Economics, 2nd edition. Harcourt: Orlando, Fl, 2000.

Niebuhr, Reinhold. Moral Man and Immoral Society. Simon and Schuster: New York, 1995.

Outka, Gene. “Social Justice and Equal Access to Health Care”. The Journal of Religious Ethics 2.1 (1973): 11-32.

Pálmadóttir, Ingibjörg. “Ávarp heilbrigðis- og tryggingaráðherra.” Lög um réttindi sjúklinga. Heilbrigðis- og tryggingaráðuneytið: Reykjavík, 2000.

Maslow, A.H. A Theory of Human Motivation. August 2000. Classics in the History of Psychology. July 27, 2007. – http://psychclassics.yorku.ca/Maslow/motivation.htm

The Universal Declaration of Human Rights. Office of the High Commissioner for Human Rights. July 27, 2007. – http://www.unhchr.ch/udhr/lang/eng.htm

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