Information Asymmetries in Health Services
By Stephen Shmanske
This article appeared in the Fall 1996 issue of The Independent Review
Several of the alleged market failures in the provision of health services actually reflect economic scarcity and therefore are best dealt with by market institutions, not government interventions. The market-failure interpretation of health-service problems that arise from adverse selection, moral hazard, and the doctor-patient relationship shows a fundamental misunderstanding and misapplication of basic economics.