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Internationally recognized economist calls for public sector pullback from healthcare |
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Sunday, 05 October 2008 |
Professor of Economics Emeritus at Harvard University Janos Kornai called on governments to pull back from healthcare, speaking at Budapest's Corvinus University.
Addressing a scientific conference, Kornai recommended reducing public ownership to prevent overspending and demand accountability for violations of financial discipline, as ways to put the brakes on the global escalation of hospital costs. Acknowledging that there was no quick and easy way to end the health sector's propensity to overspend, he argued that when central budgets repeatedly rescue healthcare facilities they are in effect offering incentives to behave irresponsibly.
Instead, he recommended letting the institutions do their own reorganizing to get back in the black.
While saying that government assistance is not necessarily damaging, he noted that out of the 38 Hungarian hospitals consolidated with government funding in 1996, sixteen needed help from public funds again in 2002.
Kornai went on to argue that the current global financial crisis was an illustration of how government consolidation sent the wrong pedagogical message. The current global financial turmoil has clear links to the 1990s consolidation that covered 25 percent of the international banking sector, he said.
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