Public Policy: Object of Choice or Emergent Phenomena? Learning from the Implementation of the Medical Reimbursement Act in Poland

Abstract

The recurring implementation and continuous maintenance of price controls implies a deep incongruence between public policy and economic common sense. Yet, economists do not tire of concluding their papers with policy recommendations as if oblivious to the ineffectiveness of their efforts. By assuming that policy is an object of choice, economists have no alternative but to naively hope for a decision maker sensitive to economic logic. An alternative approach is to think of policy, not as an object of choice but as an outcome of a competitive process. From this perspective, the often-lamented disregard for economic principles is not a characteristic of a deficient policy-maker, but a systemic quality of institutional arrangements. I illustrate my argument with the analysis of the implementation of rigid prices for reimbursed pharmaceuticals in Poland.

Keywords: entangled political economy, health care, price controls, medical reimbursements

JEL Classification: B41, D78, D85, P16