Top of page

Book/Printed Material Insurance and innovation in health care markets

View Enlarged Image

About this Item

Title

  • Insurance and innovation in health care markets

Summary

  • "Innovation policy often involves an uncomfortable trade-off between rewarding innovators sufficiently and providing the innovation at the lowest possible price. However, in health care markets with insurance for innovative goods, society may be able to ensure efficient rewards for inventors and the efficient dissemination of inventions. Health insurance resembles a two-part pricing contract in which a group of consumers pay an up-front fee ex ante in exchange for a fixed unit price ex post. This functions as if innovators themselves wrote efficient two-part pricing contracts, where they extracted sufficient profits from the ex ante payment, but still sold the good ex post at marginal cost. As a result, we show that complete, efficient, and competitive health insurance for innovative products - such as new drugs, medical devices, or patented procedures - can lead to perfectly efficient innovation and utilization, even when moral hazard exists. Conversely, incomplete insurance markets in this context lead to inefficiently low levels of innovation. Moreover, optimally designed public health insurance for innovative products can solve the innovation problem by charging ex ante premia equal to consumer surplus, and ex post co-payments at or below marginal cost. When these quantities are unknown, society can usually improve static and dynamic welfare by covering the uninsured with contracts that mimic observed private insurance contracts"--National Bureau of Economic Research web site.

Names

  • Lakdawalla, Darius
  • Sood, Neeraj
  • National Bureau of Economic Research

Created / Published

  • Cambridge, MA : National Bureau of Economic Research, c2005.

Headings

  • -  Health insurance
  • -  Medical innovations--Economic aspects

Notes

  • -  Title from PDF file as viewed on 9/21/2005.
  • -  Includes bibliographical references.
  • -  Also available in print.
  • -  Mode of access: World Wide Web.
  • -  System requirements: Adobe Acrobat Reader.

Call Number/Physical Location

  • HB1

Digital Id

Library of Congress Control Number

  • 2005618921

Access Advisory

  • Unrestricted online access

Online Format

  • image
  • pdf

Additional Metadata Formats

Rights & Access

More about Copyright and other Restrictions

For guidance about compiling full citations consult Citing Primary Sources.

Cite This Item

Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

Lakdawalla, Darius, Neeraj Sood, and National Bureau Of Economic Research. Insurance and Innovation in Health Care Markets. Cambridge, MA: National Bureau of Economic Research, 2005. Pdf. https://aj.sunback.homes/item/2005618921/.

APA citation style:

Lakdawalla, D., Sood, N. & National Bureau Of Economic Research. (2005) Insurance and Innovation in Health Care Markets. Cambridge, MA: National Bureau of Economic Research. [Pdf] Retrieved from the Library of Congress, https://aj.sunback.homes/item/2005618921/.

MLA citation style:

Lakdawalla, Darius, Neeraj Sood, and National Bureau Of Economic Research. Insurance and Innovation in Health Care Markets. Cambridge, MA: National Bureau of Economic Research, 2005. Pdf. Retrieved from the Library of Congress, <aj.sunback.homes/item/2005618921/>.