TY - JOUR
T1 - Health insurance theory
T2 - The case of the missing welfare gain
AU - Nyman, John A
PY - 2008/11/1
Y1 - 2008/11/1
N2 - An important source of value is missing from the conventional welfare analysis of moral hazard, namely, the effect of income transfers (from those who purchase insurance and remain healthy to those who become ill) on purchases of medical care. Income transfers are contained within the price reduction that is associated with standard health insurance. However, in contrast to the income effects contained within an exogenous price decrease, these income transfers act to shift out the demand for medical care. As a result, the consumer's willingness to pay for medical care increases and the resulting additional consumption is welfare increasing.
AB - An important source of value is missing from the conventional welfare analysis of moral hazard, namely, the effect of income transfers (from those who purchase insurance and remain healthy to those who become ill) on purchases of medical care. Income transfers are contained within the price reduction that is associated with standard health insurance. However, in contrast to the income effects contained within an exogenous price decrease, these income transfers act to shift out the demand for medical care. As a result, the consumer's willingness to pay for medical care increases and the resulting additional consumption is welfare increasing.
KW - Health insurance theory
KW - Moral hazard
KW - Welfare
UR - http://www.scopus.com/inward/record.url?scp=53849097377&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=53849097377&partnerID=8YFLogxK
U2 - 10.1007/s10198-007-0084-z
DO - 10.1007/s10198-007-0084-z
M3 - Article
C2 - 18058142
AN - SCOPUS:53849097377
SN - 1618-7598
VL - 9
SP - 369
EP - 380
JO - European Journal of Health Economics
JF - European Journal of Health Economics
IS - 4
ER -