Uncertainty And The Welfare Economics Of Medical Care

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Kenneth Arrow's classic 1963 article that details the differences between the medical care industry and competitive market models. This is why privatizing health care does not work well.

Quotations

[...] the failure of the market to insure against uncertainties has created many social institutions in which the usual assumptions of the market are to some extent contradicted. The medical profession is only one example, though in many respects an extreme one. All professions share some of the same properties. The economic importance of personal and especially family relationships, though declining, is by no means trivial in the most advanced economies; it is based on non-market relations that create guarantees of behavior which would otherwise be afflicted with excessive uncertainty. Many other examples can be given. The logic and limitations of ideal competitive behavior under uncertainty force us to recognize the incomplete description of reality supplied by the impersonal price system.
Kenneth Arrow, " Uncertainty And The Welfare Economics Of Medical Care Uncertainty And The Welfare Economics Of Medical Care"