Health Policy and the Public Interest

The book provides a systematic introduction to the theory of health and the theory of health policy design that is grounded on a good understanding of human nature. Given the aversion to extreme risks that is quite universal, it is shown that reducing extreme risks will improve welfare, and so it is important for the government to protect citizens against such extreme risks as arising from health risks. It then shows how health policy should incorporate the incentives of patients and caregivers to render the preservation of health efficient. Using numerical examples and graphical analysis, and drawing on the experience in the US, the UK, Japan, Sweden, Denmark, Canada, Mainland China, Taiwan, Hong Kong, Singapore, France, etc., this book shows the importance of defining the appropriate role of publicly provided care. The author argues that publicly provided care should cover "basic care" and should form the backbone of healthcare. This care should be universally accessible at an appropriate price, which should discourage demand side moral hazard and at the same time should offer no incentive for suppliers to over-supply or under-supply services. Eligible healthcare expenses should be capped, as they are in Denmark, Norway, and Taiwan, and proposed by President Obama. Private healthcare and health insurance have a place too, to provide supplementary care and greater choice. In the discourse, the peculiarities of the healthcare market will be discussed, so that the student will gain a good mastery of such concepts as moral hazard, information asymmetry, principal agent problem, adverse selection, capitation, and insurance.