The Theory of Demand for Health Insurance

Rating:
Summary: Attn: Pauly... This is the correct theory of demand.
Review: I was recently a student in Nyman's Health Economics class. This book provides a great introduction to the theory of demand for health insurance. It is a stark and entirely correct contrast to the conventional theory, and leads to a number of important policy implications. This truly is a re-examination of all we understand about health insurance at the basic level.

To sum it up, health insurance is demanded not because it reflects consumer's desire to avoid risk. Rather, it reflects a desire to receive additional income when sick from those who are healthy. Consequently, the moral hazard of increased consumption of medical care is welfare-increasing rather than welfare-decreasing.

If you wish to understand what (hopefully) will some day become THE theory of demand for health insurance, buy and read this book.