Publication Date

Spring 2012

Degree Type

Thesis

Degree Name

Master of Arts (MA)

Department

Economics

Advisor

Jeffrey R. Hummel

Keywords

Health Care, Induced Demand, Life Expectancy, Medical Insurance, Moral Hazard, Subsidies

Subject Areas

Economics; Health care management; Medical ethics

Abstract

Health-care consumption in the United States has risen from 5.2% in 1960 to 17.8% of 2009 Gross Domestic Product (GDP) creating a burden that will soon be too heavy for the economy to bear. This paper proposes that the primary accelerants of health-care expenditures result from the third-party payer system that emerged in the 1950s. These corporate benefits and government subsidies, when overlaid on the traditional health-care model, have led to sustained increases in the production, recommendation, and consumption of health care while magnifying the moral hazard problem inherent in health insurance.

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