Health Insurance and Market Failure since Arrow

• Published in: Journal of health politics, policy and law policy and law, 2001-10, Vol.26 (5), p.957-966
• Main Author: Glied, Sherry A.
• Format: Article
• Language: English
• Subjects: Biomedical Technology; Disability insurance; Economic Competition; Economic theory; Economics; Economics, Medical - history; Economics, Medical - trends; Expenditures; Failure; Health care; Health Care Costs; Health care expenditures; Health care industry; Health care policy; Health Care Sector - history; Health Care Sector - trends; Health Care Services; Health Care Services Policy; Health economics; Health Insurance; Health Services Needs and Demand - economics; History, 20th Century; Hospitals; Insurance coverage; Insurance, Health - trends; Kenneth Joseph Arrow; Major medical insurance; Market economies; Market Economy; Market failure; Medicaid; Medicare; Medicine and Health; Models, Economic; Moral hazard; Policy studies; Politics; Prepayments; Public Health and Health Policy; Public Policy; Social Welfare - economics; Social Welfare - history; Technology; United States; Writers
• ISSN: 0361-6878; 1527-1927
• DOI: 10.1215/03616878-26-5-957

In its operation, health insurance introduces its own set of market failures. The key features of the health insurance institutions observed now are, in turn, responses to the existence of these market failures. This recursive relationship between institutions and market failure is a core organizing theme of Kenneth Arrow's article. The purpose of an article is to build on Arrow's work in examining the evolution of insurance institutions in response to the market failures that arise in individual insurance contracts and in the market for health insurance.