Introduction Importance Of The Theory Why do consumers purchase health insurance? To purchase anything, the consumer must give up something, and in the case of health insurance, that ‘something’ is the premium payment. Although the nature of the premium payment is clear (to both consumers and economists), what is not clear is the nature of
Introduction Physicians are often blamed for the high cost of healthcare in the US. Physicians dupe patients into consuming too much care, the story goes, driving up costs without producing commensurate gains in health. This line of reasoning derives from the physician-induced demand (PID) hypothesis, which is a long-debated topic in health economics. Under the
Introduction In the presence of health insurance and limited capacity, an excess demand for services remains a permanent feature of several publicly funded health systems. The demand for health care needs therefore to be rationed in one way or another. This article describes three different common types of demand rationing. It distinguishes between (1) direct
Introduction The typical analysis of health insurance and service use considers coverage for a single aggregate commodity, ‘health care.’ It is natural to extend the analysis to more than one service, raising a number of issues in health insurance design. Fundamentally, two covered services can be substitutes or complements. ‘Offset effects,’ a term common in
Demand Characteristics Definition Demand characteristics are any aspect of an experiment that may reveal the hypothesis being tested or that may cue participants as to what behaviors are expected. Cues that may reveal the true purpose of an experiment can be embedded in information conveyed in the solicitation of participants, instructions given to participants, the