More on the Value of Health Insurance : The Appropriateness Approach

This paper examines the three major theories that have influenced the perception of the value of health insurance: (1) risk protection (Arrow, 1963), (2) moral hazard (Pauly, 1968; de Meza, 1983; Pauly, 1983) and (3) the access motive (Nyman, 1999; Nyman, 2006). To overcome the separating aspects of these theories and to include empiric results about the appropriateness of health care (Lohr, et al., 1986; Siu, et al., 1986; Brook, et al., 1986), an all-embracing theoretic approach is developed. The new model merges the above mentioned theories and includes empiric findings about appropriateness of care. It furthermore publicizes the existence of “moral hazard welfare gain” and “access motive welfare loss” as new categories. Preventive care is integrated into this new approach to health insurance theory