This Is AuburnElectronic Theses and Dissertations

Rising Health Care Costs and the Two Price Market: The Impact of Third-Party Payers

Date

2007-12-15

Author

Robinson, Joshua

Type of Degree

Thesis

Department

Economics

Abstract

Martin Feldstein wrote several important papers in the 1970s concerning the reciprocal growth of health care inflation and insurance levels. This paper attempts to develop a new theoretical model based on a two-price market that will explain the reiprocal nature discovered by Feldstein, but is not dependent purely on moral hazard to explain increased costs. A general two-price model is developed, and then applied to the health care industry.