What's Special About Health Care? Health care costs are large and growing fast Number of reasons why First Welfare Theorem may be violated Poor information(physician induced demand) Adverse selection and moral hazard Disease externalities
Social Insurance Programs Generally share 4 characteristics: Participation is mandatory Eligibility and benefits depend on prior contributions Benefits begin with an identifiable occurrence Programs are not means-tested
Political Economy Defined Political Economy is the application of economic principles to the analysis of political decision making. -elf- -interestin- the marketplace, this often leads to efficiency; different implications in \political market. Maximization-one goal may be to maximize social welfare
Public Goods Defined Pure public goods share two characteristics Nonrival Cost of another person consuming the good is zero Nonexcludable-Very expensive to prevent others from consuming the good
Public Finance Defined Public finance is about the taxing and spending activities of the government. Also known as \public sector economics\or \public economics.\ Focus is on microeconomic functions of government- polices that affect overall unemployment or price levels are left for macroeconomics
1. Adverse selection(逆向选择) The situation that occurs when the people who are most likely to receive benefits from a certain type of insurance are the ones who are most likely to purchase it
