Give two examples of asymmetric information in which the health consumer has inf

Question

Give two examples of asymmetric information in which the health consumer has information that is unavailable to the health provider. Give two concrete examples in which the health provider has information that is unavailable to the health consumer. Because health insurance tends inevitably to cause moral hazard, will the population necessarily be overinsured (in the sense that a reduction in insurance would improve welfare)? Are there beneficial factors that balance against the costs of welfare loss?

Explanation / Answer

A) Health consumer has information that is unavailable to health provider. The list of hospitals that he is eligible to get treated and also tie-up hospitals under managed care plans etc. This information is usually not available to health provider.

Health consumer has no information about weather he is getting best possible treatment available, There could be other options that healthcare packages would not cover, He would almost be certainly confused about 1000's of clauses that are established by healthcare industry

FYI: Health insurance is not a cake walk, There are many diseases that are not covered under most packages.

B) First of all health care costs must come down, Insurance is not a solution to the problem, It is reduction of cost for medical services that is main issue. We see that atleast a trillion dollar is spent on healthcare annually in united states this is unjustified in any form.

Welfare is the matter of the state, As state is not providing welfare people are insuring themselves at alarming rate. They infact feel that getting sick can be financial disaster, Americans are living from hand to mouth.

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