implications that have been drawn for the appropriate organization of health care in terms of the Pareto criterion; i.e. changes which improve someone s welfare without placing a net harm on anyone else are deemed an improvement, while changes that yield net benefits to some and net arms to others cannot be evaluated in terms of whether society as a whole better off Current orthodoxy is adequately summarized in an early article by Martin Feldstein in this journal: the availability of private heaysjisn does not remedy the most basic defects of the market mechanism as a method of providing health care. Although it can permit some people with adequate foresight to escape from the precariousness of major medical expenses,, if medical care is allocated according to the patient,s financial position rather than his medical condition, the nations health-care resources will not be used as productively as possible[15, pp 22-3)1. The ajor reasons why this may not come about will be discussed later, but the diligent reader of the a priori health economics literature will search in vain for a clear alternative objective function. Feldstein, to be sure, in the article mentioned does ask '. should not health care be allocated to maximize the level of health of the nation instead of the satisfaction which consumers derive as they use health services?'(loc. cit ) 1 But even supposing that a satisfactory measure of the nations level of health existed, the unconstrained maximization of such a level is an absurd objective since it seems unlikely that the stage of negative(or zero)marginal returns would be reached short of incredibly large investments in health Not that Feldstein suggests this objective, for he later prescribes that " in making their decisions, doctors and health-care administrators should look for the optimal use of resources by weighing the benefits and costs of alternative programmes and methods of treatment indeed, much of his own subsequent work has been directed toward elping them to do just that. But a dilemma still exists, for if individual preferences are not to be counted, what are the benefits and costs to be weighed? If some benefit is foregone, no matter who loses it, is not a social ost incurred to the same value? It matters little whether the difference between benefits gained and necessary production costs is maximized, or hether production costs plus all other foregone benefits are minimized, imal consumption remains the same since it is, quite rightly, independent of the accounting conventions used. By a roundabout route, therefore, it however, the maximization of social welfare according to indications given criterion is emphasizedReproduced with permission of the copyright owner. Further reproduction prohibited without permission