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Kenneth J. Arrow Lecture Series
Moral Hazard in Health Insurance
Moral hazard―the tendency to change behavior when the cost of that behavior will be borne by others―is a particularly tricky question when considering health care. Kenneth J. Arrow's seminal 1963 paper on this topic (included in this volume) was one of the first to explore the implication of moral hazard for health care, and Amy Finkelstein―recognized as one of the world's foremost experts on the topic―here examines this issue in the context of contemporary American health care policy.
Drawing on research from both the original RAND Health Insurance Experiment and her own research, including a 2008 Health Insurance Experiment in Oregon, Finkelstein presents compelling evidence that health insurance does indeed affect medical spending and encourages policy solutions that acknowledge and account for this. The volume also features commentaries and insights from other renowned economists, including an introduction by Joseph P. Newhouse that provides context for the discussion, a commentary from Jonathan Gruber that considers provider-side moral hazard, and reflections from Joseph E. Stiglitz and Kenneth J. Arrow.
Drawing on research from both the original RAND Health Insurance Experiment and her own research, including a 2008 Health Insurance Experiment in Oregon, Finkelstein presents compelling evidence that health insurance does indeed affect medical spending and encourages policy solutions that acknowledge and account for this. The volume also features commentaries and insights from other renowned economists, including an introduction by Joseph P. Newhouse that provides context for the discussion, a commentary from Jonathan Gruber that considers provider-side moral hazard, and reflections from Joseph E. Stiglitz and Kenneth J. Arrow.
160 pages, Hardcover
First published December 2, 2014
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Displaying 1 - 5 of 5 reviews
November 17, 2016
The work is based on Amy’s lecture on Arrow’s 1963 work, so the manners of the book primarily based on that; including commentaries from Gruber, Arrow himself and Stiglitz; Q&A discussion after the above events; and ended with Arrow original work that the lecture is based upon on.
I don’t know if it is just me (since I finished Tom Sorell’s book first), but it seems that American ‘school of thought’ are drifting their discussion more on the empirical, experimented testing way; which if put as a book, astyle which I do not -would not- prefered. This primarily because some of the conclusion based on the estimation most likely be flawed.
And Amy’s insurance (Medicaid) experiment in Oregon State caught my attention as their experiment use the fundamental of random selection (lottery) to select their sample, avoiding the basis of health discrimination which is illegal in USA federal law (in contrast the presence to UK DDA interpretations).
Still, really appreciate the commentaries part, and the included discussion as it enhance the depths of the discussion and brought upon further questions. And the included original work of Ken Arrow in the last part only adds up the value of the subject, adding on works around risk and uncertainty in health and health care; it indeed prove it claims on its writing on providing a framework basis on further research, which this book by Amy has done partly.
I don’t know if it is just me (since I finished Tom Sorell’s book first), but it seems that American ‘school of thought’ are drifting their discussion more on the empirical, experimented testing way; which if put as a book, astyle which I do not -would not- prefered. This primarily because some of the conclusion based on the estimation most likely be flawed.
And Amy’s insurance (Medicaid) experiment in Oregon State caught my attention as their experiment use the fundamental of random selection (lottery) to select their sample, avoiding the basis of health discrimination which is illegal in USA federal law (in contrast the presence to UK DDA interpretations).
Still, really appreciate the commentaries part, and the included discussion as it enhance the depths of the discussion and brought upon further questions. And the included original work of Ken Arrow in the last part only adds up the value of the subject, adding on works around risk and uncertainty in health and health care; it indeed prove it claims on its writing on providing a framework basis on further research, which this book by Amy has done partly.
November 30, 2019
Di bagian tengah buku sampai akhir perlu bantuan mereka yang belajar ekonomi hehe
December 31, 2019
A surprisingly wieldy short little treatment of the economic view on health insurance. The book seems to actually be a direct transcript of a series of talks, each in reaction to the seminal framework-setting 1963 paper “Uncertainty and the welfare economics of medical care” by Nobel laureate Stanford microeconomist Kenneth Arrow. The original text is included in the back end of the volume, and comprises a full 56 pages of the 137 total pages of this short book. The unchronological ordering seems counterintuitive, but the reaction commentaries are written with a clarity and lucidity that they actually stand quite well on their own, and even serve as helpful context leading up to Arrow’s weightier text.
Foremost among the commentaries is the central commentary by MIT economist Amy Finkelstein, which focuses in on the issue of moral hazard. I love how she dives right to the point (avoiding the common academic trap of spouting arcane words and talking around the issue), she presents compelling empirical evidence from two experiments for the notion that insurance coverage does indeed cause significant ex post moral hazard of increased healthcare utilization, indeed she estimates that the increase of coverage in the US from 1950 to 1990 accounts for roughly half of the growth of health expenditure from 5% to 18% of GDP. In short, more coverage means more demand for health services.
Other commentaries offer thoughtful critiques of the temptation to think of capitation and alternative payment forms as a panacea for high cost (other factors like organizational culture, professional self-regulation and medical ethics will have to figure as part of the answer), identification of rent seeking as a rife source of inefficiency in the system (made easier by the sheer complexity of the system, and the relative inactive role of government regulators), and identification of asymmetric information as perhaps the deepest defining economic trait of the market of health services (patients blind to treatment compared to providers, payers blind to efficacy compared to providers and patients).
The Arrow piece itself is a great read too. All in all the text was surprisingly approachable to the layman, although some rare technical examples mentioning variations in elasticity in regards to price discrimination I couldn’t follow with my shabby and fading memory of my microeconomics class.
Foremost among the commentaries is the central commentary by MIT economist Amy Finkelstein, which focuses in on the issue of moral hazard. I love how she dives right to the point (avoiding the common academic trap of spouting arcane words and talking around the issue), she presents compelling empirical evidence from two experiments for the notion that insurance coverage does indeed cause significant ex post moral hazard of increased healthcare utilization, indeed she estimates that the increase of coverage in the US from 1950 to 1990 accounts for roughly half of the growth of health expenditure from 5% to 18% of GDP. In short, more coverage means more demand for health services.
Other commentaries offer thoughtful critiques of the temptation to think of capitation and alternative payment forms as a panacea for high cost (other factors like organizational culture, professional self-regulation and medical ethics will have to figure as part of the answer), identification of rent seeking as a rife source of inefficiency in the system (made easier by the sheer complexity of the system, and the relative inactive role of government regulators), and identification of asymmetric information as perhaps the deepest defining economic trait of the market of health services (patients blind to treatment compared to providers, payers blind to efficacy compared to providers and patients).
The Arrow piece itself is a great read too. All in all the text was surprisingly approachable to the layman, although some rare technical examples mentioning variations in elasticity in regards to price discrimination I couldn’t follow with my shabby and fading memory of my microeconomics class.
December 27, 2014
I do not think that Amy Finkelstein (the primary author of this volume--which reprints her lecture) or her commentators/introducers (Joe Stiglitz, Joe Newhouse, Jon Gruber and Ken Arrow), would take it the wrong way if I said that the best part of this volume was re-reading Ken Arrow's classic 1963 paper "Uncertainty and the Welfare Economics of Medical Care."
This volume is part of the Arrow Lectures series at Columbia. Amy Finkelstein's lecture revisits one aspect of Arrow's paper--moral hazard, a concept he introduced into the economic literature--and provides a careful and thorough summary of the modern empirical literature on moral hazard (which is pretty much all authored or coauthored by Amy). The essay is framed by thoughtful contributions by other leading economists, with Arrow making an interesting set of arguments on the importance of culture/institutions in remedying market failures. The volume closes with the original Arrow paper that established health economics and put imperfect information at the heart of the reason why health markets were so different from other markets and so unlikely to function effectively as pure free markets.
The entire book is a relatively quick, very clear and very worthwhile read.
This volume is part of the Arrow Lectures series at Columbia. Amy Finkelstein's lecture revisits one aspect of Arrow's paper--moral hazard, a concept he introduced into the economic literature--and provides a careful and thorough summary of the modern empirical literature on moral hazard (which is pretty much all authored or coauthored by Amy). The essay is framed by thoughtful contributions by other leading economists, with Arrow making an interesting set of arguments on the importance of culture/institutions in remedying market failures. The volume closes with the original Arrow paper that established health economics and put imperfect information at the heart of the reason why health markets were so different from other markets and so unlikely to function effectively as pure free markets.
The entire book is a relatively quick, very clear and very worthwhile read.
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July 31, 2015368.382 F4997 2015
Displaying 1 - 5 of 5 reviews