Unbiased Analysis of Today's Healthcare Issues
Health savings accounts (HSAs) have been a major point of contention for health care reformers. Supporters claim that HSAs can reduce health care costs by decreasing the moral hazard problem inherent when third parties—such as insurance companies or the government—pay for medical services. Opponents claims that HSAs will attract rich and healthy individuals, leaving only…
Most economists believe that increasing the price of an item will decrease demand for the item. Health care is no different from any other good. If you increase the copayment or coinsurance rate, people will consume fewer medical services. The famous RAND Health Insurance Experiment (HIE) demonstrated that higher coinsurance rates discourage medical care consumption.…
In modern medicine, doctors are agents for two distinct groups. The physician is an agent for the patient, but also an agent for insurance companies-especially in the managed care settings. In balancing both relationships, the doctor must juggle the conflicting principal-agent problems of information asymmetry and third party payment. Ake Blomqvist develops an interesting theoretical model to…
Introduction Much of health care today is paid for by managed care plans. If the managed care plans are profit maximizers–which I assume them to be–then they face a tradeoff. By offering a lower quality of care, they will make more money; but lowering the quality of care reduces the demand for their insurance product. …