The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Health Insurance, Economics of

  • Joseph P. Newhouse
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2241

Abstract

Health care finance has been dominated by moral hazard, potential rents and the deadweight loss from financing them, and adverse selection. Public health services and insurance tend to be universal, solving the selection problem. Private health insurance markets and public schemes that offer a choice of insurance plans generally exhibit selection. Research has found strong evidence of responsiveness of demand to insurance coverage. In health insurance markets information is asymmetric among patients, providers, and insurers, and principal–agent relationships abound. Actual health insurance and health care financing institutions have adapted to these features.

Keywords

Adverse selection Akerlof, G. Arrow, K. Asymmetric information Deadweight loss Employment-based medical insurance Group insurance Health insurance: private vs. public Insurance contracts Managed care insurance plans Medical care, state provision of Medicare Moral hazard Principal-agent relationship Rent Risk aversion 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Joseph P. Newhouse
    • 1
  1. 1.