Skip to main content
Health Insurance Theory: The Case of the Vanishing Welfare Gain
Nyman, John (Center for Economic Research, Department of Economics, University of Minnesota, 2003)
 

Title 
Health Insurance Theory: The Case of the Vanishing Welfare Gain

Author(s)

Issue Date
2003-01

Publisher
Center for Economic Research, Department of Economics, University of Minnesota

Type
Working Paper

Abstract
This paper presents theory that an important source of value is missing from conventional theory of the demand for health insurance, namely, the effect of the transfer of income (from those who purchase insurance and remain healthy to those who purchase insurance and become ill) on purchases of medical care. Because the portion of moral hazard that is attributable to income is welfare increasing and would replace some of moral hazard that is spuriously deemed to be welfare decreasing, the new theory suggests that the value of health insurance has been dramatically undervalued. Implications for policy are outlined.

Appears in Collection(s)

Series/Report Number
Discussion Paper
319

Suggested Citation
Nyman, John. (2003). Health Insurance Theory: The Case of the Vanishing Welfare Gain. Center for Economic Research, Department of Economics, University of Minnesota. Retrieved from the University of Minnesota Digital Conservancy, http://purl.umn.edu/55886.


Content distributed via the University of Minnesota's Digital Conservancy may be subject to additional license and use restrictions applied by the depositor.