This article describes the anatomy of health insurance. It begins by considering the optimal design of health insurance policies. Such policies must make tradeoffs appropriately between risk sharing on the one hand and agency problems such as moral hazard (the incentive of people to seek more...

This paper is concerned with the economics of mental health. We argue that mental health economics is like health economics only more so: uncertainty and variation in treatments are greater; the assumption of patient self-interested behavior is more dubious; response to financial incentives such...

Patients rely on medical care providers to act in their best interests because providers understand disease pathology and appropriate treatment much better than patients. Providers, however, not only give advice (diagnose) but also deliver (sell) treatments based on that advice. This creates a...