I demonstrate that to achieve dynamic efficiency, the optimal share of total surplus that a social payer should transfer to an innovating industry for a current asset depends on the marginal product of investment and the share of profits invested by the industry on the current asset and not on...

Governments in many low- and middle-income countries are developing health insurance products as a complement to tax-funded, subsidized provision of health care through publicly operated facilities. This paper discusses two rationales for this transition. First, health insurance would boost...

Incomplete health insurance enrollment is a persistent U.S. challenge despite large subsidies. We ask whether hassles built into enrollment systems matter for insurance take-up and targeting. Studying removal of an auto-enrollment policy, we find that a small hassle - a requirement to actively...

The pharmaceutical market has experienced a massive wave of vertical integration between pharmacy benefit managers (PBMs) and health insurers in recent years. Using a unique dataset on insurer-PBM contracts, we document increasing vertical integration in Medicare Part D-vertically integrated...

Existing research on selection in insurance markets focuses on how adverse selection distorts prices and misallocates products across people. This ignores the distributional consequences of who pays the higher prices. In this paper, we show that the distributional incidence depends on the...

Several past studies have found health risk to be negatively correlated with the probability of voluntary health insurance. This is contrary to what one would expect from standard textbook models of adverse selection and moral hazard. The two most common explanations to the counter-intuitive...

A long-standing economic question is how protection against harm from insurance or other harm reducing interventions leads to potentially offsetting behavior changes (ex-ante moral hazard). Immunization is a type of insurance, as individuals incur an upfront cost when they get vaccinated, but it...

Patients rely on medical care providers to act in their best interests because providers understand disease pathology and appropriate treatment much better than patients. Providers, however, not only give advice (diagnose) but also deliver (sell) treatments based on that advice. This creates a...

The U.S. healthcare system requires substantial out-of-pocket payments by most consumers, which can prevent some from receiving needed medical services. Recent policy proposals seek to address this problem by increasing government health care spending in order to reduce out-of-pocket costs. The...

This article describes the anatomy of health insurance. It begins by considering the optimal design of health insurance policies. Such policies must make tradeoffs appropriately between risk sharing on the one hand and agency problems such as moral hazard (the incentive of people to seek more...