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Preventive versus Curative Medicine: A Policy Exercise for the Classroom

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  • Ann Helwege

Abstract

This classroom example shows students that neither a health insurer (which bears only the hospitalization costs of acute care) nor the patient (who incurs lost earnings and psychic costs) has an adequate incentive to pay for preventive care, even though the total benefits of such care exceed its cost. The activity offers an application of concepts of efficiency, equity, present value, and moral hazard.

Suggested Citation

  • Ann Helwege, 1996. "Preventive versus Curative Medicine: A Policy Exercise for the Classroom," The Journal of Economic Education, Taylor & Francis Journals, vol. 27(1), pages 59-71, January.
    • Handle: RePEc:taf:jeduce:v:27:y:1996:i:1:p:59-71
    DOI: 10.1080/00220485.1996.10844895
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    References listed on IDEAS

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    1. David M. Cutler, 1994. "A Guide to Health Care Reform," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 13-29, Summer.
    2. Hansen, Gary D & Imrohoroglu, Ayse, 1992. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 118-142, February.
    3. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    4. Danzon, Patricia M, 1993. "The Economic Implications of Public Disability Insurance in the United States," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 170-200, January.
    5. Brigitte C. Madrian, 1994. "Employment-Based Health Insurance and Job Mobility: Is there Evidence of Job-Lock?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 27-54.
    6. Mark V. Pauly, 1994. "Universal Health Insurance in the Clinton Plan: Coverage as a Tax-Financed Public Good," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 45-53, Summer.
    7. Dowd, Bryan, et al, 1991. "Health Plan Choice and the Utilization of Health Care Services," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 85-93, February.
    8. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    9. Henry J. Aaron, 1994. "Issues Every Plan to Reform Health Care Financing Must Confront," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 31-43, Summer.
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    Cited by:

    1. Michael H. Kennedy, 2012. "Using Online Courseware to Play a Simulation Illustrating the Concept of Moral Hazard in Health Care," International Review of Economic Education, Economics Network, University of Bristol, vol. 11(1), pages 67-77.
    2. Ikenwilo, Divine, 2013. "A difference-in-differences analysis of the effect of free dental check-ups in Scotland," Social Science & Medicine, Elsevier, vol. 83(C), pages 10-18.
    3. Pedro P. Barros & Xavier Martinez-Giralt, 2002. "Preventive health care and payment systems to providers," UFAE and IAE Working Papers 507.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).

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