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Commitment Problems Justify Subsidies for Medical Insurance

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Author Info

  • Amihai Glazer

    ([1] Graduate School of Industrial Administration, Carnegie Mellon University, 15213 Pittsburgh PA [2] Department of Economics, University of California, 92717 Irvine, California)

  • Esko Niskanen

    (Government Institute for Economic Research, P.O. Box 269, Helsinki, Finland)

Abstract

Consumers who believe that government will provide them with some public medical care, even if they did not purchase medical insurance, may choose to purchase no such insurance. The amount of medical care consumed will then be less than the first-best optimum. Under specified conditions government can then increase the welfare of consumers by subsidizing insurance, or by providing public health care at a more generous level than the minimum it would otherwise give. The Geneva Papers on Risk and Insurance Theory (1992) 17, 137–145. doi:10.1007/BF00962710

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance Theory.

Volume (Year): 17 (1992)
Issue (Month): 2 (December)
Pages: 137-145

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Handle: RePEc:pal:genrir:v:17:y:1992:i:2:p:137-145

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Cited by:
  1. Glazer, Amihai & Rothenberg, Lawrence S., 1999. "Increased capacity may exacerbate rationing problems: with applications to medical care," Journal of Health Economics, Elsevier, vol. 18(5), pages 669-678, October.

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