This volume revisits Arrow's classic 1963 essay "Uncertainty and the Welfare Economics of Medical Care" in light of the many changes in American health care.
This volume revisits the Nobel Prize-winning economist Kenneth Arrow's classic 1963 essay "Uncertainty and the Welfare Economics of Medical Care" in light of the many changes in American health care since its publication. Arrow's groundbreaking piece, reprinted in full here, argued that while medicine was subject to the same models of competition and profit maximization as other industries, concepts of trust and morals also played key roles in understanding medicine as an economic institution and in balancing the asymmetrical relationship between medical providers and their patients. His conclusions about the medical profession's failures to "insure against uncertainties" helped initiate the reevaluation of insurance as a public and private good.Coming from diverse backgrounds-economics, law, political science, and the health care industry itself-the contributors use Arrow's article to address a range of present-day health-policy questions. They examine everything from health insurance and technological innovation to the roles of charity, nonprofit institutions, and self-regulation in addressing medical needs. The collection concludes with a new essay by Arrow, in which he reflects on the health care markets of the new millennium. At a time when medical costs continue to rise, the ranks of the uninsured grow, and uncertainty reigns even among those with health insurance, this volume looks back at a seminal work of scholarship to provide critical guidance for the years ahead.ContributorsLinda H. AikenKenneth J. ArrowGloria J. BazzoliM. Gregg BlocheLawrence CasalinoMichael ChernewRichard A. CooperVictor R. FuchsAnnetine C. GelijnsSherry A. GliedDeborah Haas-WilsonMark A. HallPeter J. HammerClark C. HavighurstPeter D. JacobsonRichard KronickMichael L. MillensonJack NeedlemanRichard R. NelsonMark V. PaulyMark A. PetersonUwe E. ReinhardtJames C. RobinsonWilliam M. SageJ. B. SilversFrank A. SloanJoshua Graff Zivin
Foreword / Mark V. Pauly viiPreface / Victor R. Fuchs xiiiKenneth Arrow and the Changing Economics of Health Care: "Why Arrow? Why Now?" / Peter J. Hammer, Deborah Haas-Wilson, Mark A. Peterson, and William M. Sage xviiUncertainty and the Welfare Economics of Medical Care (American Economics Review, 1963) / Kenneth J. Arrow 1Part 1: Supply, Demand, and Health Care Competition General Equilibrium and Marketability in the Health Care Industry / Michael Chernew 37Arrow's Concept of the Health Care Consumer: A Forty-Year Retrospective / Frank A. Sloan 49Uncertainty and Technological Change in Medicine / Annetine G. Gelijns, Joshua Graff Zivin, and Richard R. Nelson 60Human Inputs: The Health Care Workforce and Medical Markets / Richard A. Cooper and Linda H. Aiken 71Health Care as a (Big) Business: The Antitrust Response / Clark C. Havighurst 84Part 2: Risk, Insurance, and Redistribution Health Insurance and Market Failure since Arrow / Sherry A. Glied 103Can Efficiency in Health Care Be Left to the Market? / Uwe E. Reinhardt 111Valuing Charity / Richard Kronick 134Medical Service Risk and the Evolution of Provider Compensation Arrangements / Gloria J. Bazzoli 142The Role of the Capital Markets in Restructuring Health Care / J. B. Silvers 156Part 3: Information, Knowledge, and Medical Markets Arrow and the Information Market Failure in Health Care: The Changing Content and Sources of Health Care Information / Deborah Haas-Wilson 169The End of Asymmetric Information / James C. Robinson 181Managing Uncertainty: Intermediate Organizations as Triple Agents / Lawrence Casalino 189Moral Hazard vs. Real Hazard: Quality of Care Post-Arrow / Michael L. Millenson 202Part 4: Social Norms and Professionalism Arrow's Analysis of Social Institutions: Entering the Marketplace with Giving Hands? / Peter J. Hammer 215The Market for Medical Ethics / M. Gregg Bloche 230The Role of Nonprofits in Health Care / Jack Needleman 243Arrow on Trust / Mark A. Hall 259From Trust to Political Power: Interest Groups, Public Choice, and Health Care / Mark A. Peterson 272Regulating Health Care: From Self-Regulation to Self-Regulation? / Peter D. Jacobson 290The Lawyerization of Medicine / William M. Sage 302Part 5: Response by Professor Arrow Reflections on Reflections / Kenneth J. Arrow 321Contributors 327Index 335