Health Insurance, Economics of

Health care finance has been dominated by moral hazard, potential rents and the deadweight loss from financing them, and adverse selection. Public health services and insurance tend to be universal, solving the selection problem. Private health insurance markets and public schemes that offer a choice of insurance plans generally exhibit selection. Research has found strong evidence of responsiveness of demand to insurance coverage. In health insurance markets information is asymmetric among patients, providers, and insurers, and principal–agent relationships abound. Actual health insurance and health care financing institutions have adapted to these features.