Healthcare Regulation
The primary public interest and economic theories of government are the public interest theory and capture theory. The public interest theory is a regulation theory used as a prescription of what the government ought to do and a description of what the government does. The theory argues that the government controls prices to avoid overcharging by natural monopolies, imposes safety standards with the aim of preventing accidents such as mass poisonings and fires, regulates employment to avoid monopoly power over employees, and regulates the issuances of security to investors so that they are not cheated (Shleifer, 2005). This theory has become a foundation of public economies in the modern world and a guide for socialists because of its role in justifying a significant part of general regulation and ownership growth over the 20th century. Capture theory views the regulatory process as a political market where the industry requires law for economic good, and regulators provide the regulation at a cost. Voters generally meet this cost. The market includes interest groups competing to influence regulatory agencies, and customers play the role of distributing commodities to individuals who value them the most or those with highly effective demand (Gagnepain & Ivaldi, 2017). Therefore, the industry is in charge of exchanging political support for governing outcomes, which may be direct financial transfers materialized in entry and price-fixing controls.
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Basic Assumptions of Each Theory
The main assumptions of the public interest theory are the dominance of a market failure, the existence of a caring regulator or a well-organized political process, and the existence of well-organized regulatory bodies (Shleifer, 2005). Beginning with the distribution of limited resources by a competitive market instrument, four types of market letdowns can be identified. Inconsistencies between resource and value costs can emerge from unstable markets, imperfect competition, undesirable market results, and missing markets. The theory assumes that flawed competition results in price deviation from the marginal cost of resources. Unstable markets include vigorous inefficiencies associated with the speed at which the markets stabilize or clear (Shleifer, 2005). Such instabilities result in wasting resources, and missing calls indicate that the demand for socially treasured services and goods for which aggregate value is more than total cost but where markets or prices do not arise. The theory also assumes that even though a competitive market mechanism efficiently sets aside limited resources, the outcome of the market processes may still be seen as undesirable or unjust from other social viewpoints. The primary assumption of the capture theory is that the regulatory agency, regulated customers, and party are all greedy and focused on seeing to meet their interests. The second assumption is that all claim-related individual has a rational expectation for another party (Shleifer, 2005). The third assumption is that it is possible to construct a law’s role as an instrument for channeling wealth distribution among those who can organize themselves and put pressure on the regulator function, hence correcting market failures.
The Contradictions Inherent in The Two Theories
The public interest theory contradicts the influential concept that the market is a unique kind of impulsive order. The unique role of public intervention as a way of instituting and fostering competition challenges the capture theory because it finds it hard to provide a rationale for the existence of regulation aimed at creating markets rather than being directed at imitating competition in case of a market failure. The public interest theory’s emphasis on the integral limits to legal control over the economy creates doubts about supervisory effectiveness, although it recognizes the relationship between economic and legal systems (Gordon, 2013). The public interest theory also conceptualizes a connection between the economy and the law by acknowledging that markets are founded on non-market backgrounds. Another contradiction is that while the public interest theory defends regulation in the specific form of reflexive law, the capture theory attacks the role of code within the economy because, in the view of the public interest theory, regulation is needed to benefit regulates but in the opinion of capture theory, law affects the economic discovery and market coordination process by maximizing the interests of regulators.
How are the actions of the U.S. government based on these theories affecting the cost of and access to healthcare services?
The government’s actions in setting price controls to prevent pharmaceutical companies from taking advantage of patients have had a significant role in reducing the cost of medicine, particularly those used to treat terminal illnesses. Politicians threaten to regulate the pharmaceutical industry because regulations impose few political costs on politicians. After all, most companies in the industry are private companies. The role of the government in controlling the cost of medicine is vital in setting reasonable prices because the pharmaceutical industry puts the needs of investors first, and it cannot launch an effective campaign to counter political interference to avoid losing its licenses. Government action has also made it easier for citizens to access healthcare services by including healthcare providers in the list of all-inclusive benefits the government offers. Being on the list also protects healthcare providers from harsh market forces by minimizing the marginal cost of the services they offer to zero, hence providing affordable healthcare.
References
Gagnepain, P., & Ivaldi, M. (2017). Economic efficiency and political capture in public service contracts. The Journal of Industrial Economics, 65(1), 1-38. https://doi.org/10.1111/joie.12118
Gordon, R. (2013). Regulation and economic analysis: A critique over two centuries. Springer Science & Business Media.
Shleifer, A. (2005). Understanding regulation. European Financial Management, 11(4), 439-451. https://doi.org/10.1111/j.1354-7798.2005.00291.x
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Question 
The U.S. government is pervasively involved in the U.S. healthcare system, such as in the financing of healthcare services through programs such as Medicare and Medicaid. The U.S. government also subsidizes healthcare professional training institutions. The public interest and economic theories of government often apply to explain the U.S. government’s actions.
Healthcare Regulation
Prepare a report with at least three pages for your manager on the public interest and economic theories of government. Include the following in your notice:
A brief introductory background for the two theories
An outline of the basic assumptions of each theory
The contradictions inherent in the two theories
Your opinion on how the actions of the U.S. government based on these theories are affecting the cost of and access to healthcare services
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