from various aspects of patient uncertainty about various dimensions of health care service ( d)Patients frequently will not be able to calculate the cost they will incur in receiving medical treatment; (e) they are frequently ignorant about the quality of the care they receive, (f)fair insurance may not be obtainable; and (g) moral hazard prevents an optimal insurance pricing structure 4. Consumers who seek medical care usually do so before they know how much cost they will be incurring. In the face of this uncertainty it is clearly ossible that they may take decisions which subsequently they may come to regret. They may, for example, take too much care and discover they have run up a bill higher than they would have been prepared to pay before consultation; or they may take too little if they overestimated the probable cost and the appropriate treatments are highly indivisible(e.g. having embarked upon a cheap course, an expensive and more effective course would add too much to the cost given the wealth effects that have already happened as a result of treatment already received; or that alternative courses are mutually incompatible, e.g. having embarked upon a cheap course the expensive course would not be medically feasible). Partly, the problem here is one that has already been met, namely how one can tell whether the optimal amount of information about the relevant choice parameters has been obtained. Under a zero pricing system, such as one may imagine the ideal National Health Service to be, the optimal amount of information about direct costs for any patient to collect will ormaly be zero, since the costs of his choices are spread over the whole of society and the burden upon him is effectively zero, though the collective burden of the decisions of the rest of society clearly is not zero. In this system, the cost of care falls on an individual not as a result of his ow individual choices but as a result of the choices of others through the payment of a(hidden) tax-price. The result of society-wide risk pooling is thus to reduce to negligible proportions the incidence upon him of the costs mplied by his own choices whilereducing to quite a low level the uncertainty about the costs that will be thrust upon him by the rest of society. The "ideal NHS system may therefore appear to have two major built-in allocative inefficiencies. The first of these derives from the pooling element. As arrow has shown, insurance requires a maximum degree of risk dis crimination for its full social benefit to be realized, while pooling implies no discrimination. Thus, under conditions of uncertainty, options on 1 The'ideal'NHS is characterized by zero pricing for all health care services, public inputs, and general fund tax financing. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.Reproduced with permission of the copyright owner. Further reproduction prohibited without permission