Tim Harford, of the Financial Times, writes in his The Undercover Economist,
“Health insurance is important because illnesses are extremely unpredictable and sometimes cost a lot to treat. Not only can some medical treatment be very expensive, it is often impossible to postpone it until a more convenient moment.”
Last week, Mr. Barack Obama addressed the American Medical Association (AMA) on healthcare reform in the country and the exigent necessity of correcting the market failures that mar the system in the world’s most powerful economy. A chunk of healthcare in the U.S is controlled by private players and is thus subject to crude laws of the market, hence the problem of asymmetric information between the insurer and the insured and high insurance premiums.
While the full text of the speech is here, and a brief analysis of the same here, it is of vital importance to note that the issue of healthcare cuts across spectrums of politics, economics and social dynamics above all; specifically, debate over capitalism v. role of the state (An excellent piece by Amartya Sen, on capitalism after the financial crisis and a review of criticisms against capitalism, can be found here ), and fairness v. efficiency.
The situation has assumed dangerous proportions after the sub-prime mortgage crisis, as more people laid off means more people left without resources to pay for their health. With ever-burgeoning insurance premiums, rising unemployment, falling wages and an unprecedented financial crisis, the subject of healthcare reflects important and interesting intersections between law, economics and policy.




