Information asymmetry is a common issue in the market for health insurance-in theory,how does...

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Information asymmetry is a common issue in the market for health insurance-in theory,how does information asymmetry impact the market for health insurance?how do consumers,insurers and provider behave?what is the impact on premiums and coverage?Suggested reading:Rolland s, Goodman A and station.The economics of Health and Health care.International edition,7th edition. Upper saddle river,N.J : Pearson prentice hall;2013Chapter 8:Demand and supply of Health insurance and chapter 10:asymmetric information and agency

Paulami · Accepted Answer

The theory of “lemon” by Akerlof is applicable in the areas where asymmetric information exchange takes place between the buyers and sellers. The existence of lemon problem was in the marketplace for business as well as consumer products and in the area of investing too, associated with disparity in the value which is perceived of  aan investment between the sellers and buyers. The prevalence of lemon problem is also in financial sectors which include credit markets and insurance. For instance, the corporate finance realm, a lender with asymmetric and less-than-ideal knowledge about the exact creditworthiness of a borrower. 
1. Doctors and caregivers usually overwhelm patients with unnecessary treatments and information.
2. Patients experiencing asymmetric information want unnecessary treatments because they lacked knowledge and information.
3. The doctors and caregivers could not provide adequate knowledge and essential care to the patients.

Information asymmetry is a common issue in the market for health insurance-in theory,how does information asymmetry impact the market for health insurance?how do consumers,insurers and provider...

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