ISSN: 2332-0761
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Department of Mathematical Economics, School of Economics, M.K.University, Madurai, India
Review Article
An Analysis of Economics of Health Care and Health Insurance
Author(s): R Seenivasan
This research paper is Health insurance increases the demand for healthcare. Since the RAND Health Insurance Experiment in the 1970s this has been demonstrated in many contexts and many countries. From an economic point of view this fact raises the concern that individuals demand too much healthcare if insured, which generates a welfare loss to society. This so-called moral hazard effect arises because individuals demand healthcare that has less value to them than it costs to provide it. For that reason, modern health insurance plans include demand side cost-sharing instruments like deductibles and copayments. There is a large and growing literature analyzing the effects of these cost-sharing instruments on healthcare demand.
Three issues have recently received increasing attention.
First, cost-sharing instruments such as yearly deductibles combined with stop losse.. View More»