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Ep. 83 The Faulty Economics of Health Insurance: Arrow Revisited (Pt. 2)

Robert P. Murphy, PhD

It is commonly believed that healthcare is a sector plagued by “market failure.” A heavy dose of government intervention is therefore necessary to optimize the needs of society. A paper most commonly cited in support of that view is one published in 1963 by Nobel Prize winner Kenneth Arrow, one of the giants of economic theory in the 20th century, and titled “Uncertainty and the Welfare Economics of Medical Care.”

But how does economic theory arrive at the concept of market failure and how do economists conceive of health care when they apply their theoretical models to medical practice?

To help sort this out, we have as our guest Robert P. Murphy, economist, teacher, and author of many books.  Dr. Murphy obtained his PhD from NYU and is Senior Fellow at the Mises Institute.  He is co-host, with Tom Woods, of the popular podcast Contra Krugman and he is also host of The Bob Murphy Show, “a podcast promoting free markets, free minds, and grateful souls.”

The episode in in 2 parts.  In the first part, we reviewed the theoretical framework that forms the background to Arrow’s paper.  In this second part, we delve into the paper itself, discuss how economists conceive (or misconceive) of medical care, and what the implications have been for the US healthcare system as a whole.

GUEST:

Robert P. Murphy: Website and Twitter

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RELATED EPISODE:

Ep. 82. The Economics of Health Care: Market Failure or Faulty Models? (Pt. 1 with gust Bob Murphy)

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