Research work · 2017
Uncertainty and the welfare economics of medical care: an Austrian rebuttal Part 2
The Southwest Respiratory and Critical Care Chronicles
Abstract
Abstract Part 2 of this 3 part series continues a rebuttal to Kenneth Arrow’s famous argument that health care is special and free market economic principles do not apply. The rebuttal is based on concepts of Austrian Economics. Part 1 of the series framed the debate and discussed general concepts. Part 2 discusses specific examples of how health care is special and does not behave according to market principles. Uncertainty of demand and uncertainty of outcome are discussed in detail. Information asymmetry is a special form of uncertainty that Kenneth Arrow claimed was somewhat unique to health care. Free market solutions to these problems are discussed in general with specific examples provided. The conclusions are that free market insurance (as opposed to subsidy) handles uncertainty of demand, branding handles uncertainty of outcome, and the free market for specialized information handles information asymmetry.