Asymmetric Information and Health Insurance

In this video, we discuss asymmetric information, adverse selection, and propitious selection in relation to the market for health insurance. Health insurance consumers come in a range of health, but to insurance companies, everyone has the same average health. Consumer have more information about their health than do insurers. How does this affect the price of health insurance? Why would some consumers prefer to not buy health insurance at all? And how does this all relate to the Affordable Care Act? Let’s dive in.

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[malsawmkimapautu]

Watched your videos a night before a test and i got the highest marks in my class!

[inuken]

Did way better job than my uni professor, thank you!

[RobertitoF]

Surely the way to overcome the problems of group health insurance is tying insurance to membership of a group that is more stable than working for a particular employer. An obvious choice would be citizenship (or residency): if health insurance is provided to everyone who is a citizen (or resident), the problem of losing insurance when you lose your job or retire is eliminated. What's more, since paying taxes is a requirement of citizenship (or residency), you can compel everyone to pay in a manner that is equitable, rather than forcing those can often least afford it (ie. sick people) to pay the most. This is why there is not a single successful private healthcare system in the world, whereas socialised health care is successful in numerous countries.

[minhtrinhanh]

Thanks a lot! Your videos help me a lot!

[inakigoenaga]

Why your videos are so great but when I do akerlov excercices they seem so boring

[adgstr]

Super good video!


Glad I found you :)

[samhuileo]

now I see what Obamacare is about! thanks!

[cassiuslives]

what is the link to the previous video about used cars?

[dooglio]

I think the makers of this video do not understand how insurance actually works in terms of health care. There never used to be an over-regulated, managed healthcare system in the US--it used to only be catastrophic health insurance. For all other medical needs, one paid out of pocket.

Like life insurance, the idea is to get a policy when you are young and healthy, and you contribute to a pool that over time is available to you if or when you do get sick. In the event of a very expensive operation that you might have to have, the risk is spread over all of the healthy people that have insurance.

The ACA is attempting to force into the market what would happen if we had a truly free market in health care insurance, not the regulated and cartelized monstrosity we are faced with today. We don't need an ACA for life insurance, so we certainly don't need one for medical insurance.

Insurance companies also invest their capital into the stock market. Their income stream is not just limited to underwriting income. This was not discussed in the video, either.

[Disthron]

I find this video a bit moot, since health insurance shouldn't exist anyway.