HESA 5341 Lecture Notes - Lecture 6: Insurance, Adverse Selection, Opportunism
3 Feb 2018
School
Department
Course
Professor
Document Summary
Asymmetric information means that one side of a transaction has more (relevant) information than the other. Asymmetric information confronts healthcare managers in most of their professional roles. Agent and principal: agent is the person who acts on behalf of or on order from the principal. Asymmetric information adverse selection: q. Who will want to purchase health insurance assuming risk-neutral individuals: those whose expected healthcare expenditures are at least as high as their insurance premium. Insurance premium will have to rise and then once again the healthier of those who are left will leave (adverse selection) Asymmetric information opportunism: crime/fraud is another form of opportunistic behavior in healthcare, e. g. For instance, create reimbursement or billing plans that discourage opportunistic healthcare providers or patients from participating, or from behaving in an opportunistic way: monitoring (costly and difficult) Special healthcare challenges when it comes to information asymmetries: healthcare providers bill insurance plans for their services almost unique to healthcare.
