What should (public) health insurance cover?

In any system of health insurance, a decision must be made about what treatments the insurance should cover. One way to make this decision is to rank treatments by their ratios of health benefits to treatment costs. If treatments that are not offered by the health insurance can be purchased out of pocket, the socially optimal ranking of treatments to be included in the health insurance is different from this standard cost-effectiveness rule. It is no longer necessarily true that treatments should be ranked higher the lower are treatment costs (for given health benefits). Moreover, the larger are the costs per treatment for a given benefit-cost ratio, the higher priority should the treatment be given. If the health budget in a public health system does not exceed the socially optimal size, treatments with sufficiently low costs should not be performed by the public health system if treatment may be purchased privately out of pocket.

Building resilience and adaptation to manage Arctic change.

Unprecedented global changes caused by human actions challenge society's ability to sustain the desirable features of our planet. This requires proactive management of change to foster both resilience (sustaining those attributes that are important to society in the face of change) and adaptation (developing new socioecological configurations that function effectively under new conditions). The Arctic may be one of the last remaining opportunities to plan for change in a spatially extensive region where many of the ancestral ecological and social processes and feedbacks are still intact. If the feasibility of this strategy can be demonstrated in the Arctic, our improved understanding of the dynamics of change can be applied to regions with greater human modification. Conditions may now be ideal to implement policies to manage Arctic change because recent studies provide the essential scientific understanding, appropriate international institutions are in place, and Arctic nations have the wealth to institute necessary changes, if they choose to do so.

Genetic testing in competitive insurance markets with repulsion from chance: a welfare analysis.

A central theme in the international debate on genetic testing concerns the extent to which insurance companies should be allowed to use genetic information when offering insurance contracts. We provide a welfare analysis of this issue within a model of an insurance market with asymmetric information, having the following crucial feature: in addition to a state-contingent consumption profile, a person's well-being depends on her attitude towards resolution of future health uncertainty, and this attitude varies across the population. We present stylized facts that motivate this approach. In the formal analysis, we find that both tested high-risks and untested individuals are equally well off whether or not test results can be used by insurers. Individuals who test for being low-risks, on the other hand, are made worse off by not being able to verify this to insurers. This implies that, in terms of welfare, a regulatory regime in which the use of genetic information by insurers is allowed is better than one in which it is not allowed.

Coping with uncertainty: a call for a new science-policy forum.

The scientific and policy worlds have different goals, which can lead to different standards for what constitutes "proof" of a change or phenomena, and different approaches for characterizing and conveying uncertainty and risk. These differences can compromise effective communication among scientists, policymakers, and the public, and constrain the types of socially compelling questions scientists are willing to address. In this paper, we review a set of approaches for dealing with uncertainty, and illustrate some of the errors that arise when science and policy fail to coordinate correctly. We offer a set of recommendations, including restructuring of science curricula and establishment of science-policy forums populated by leaders in both arenas, and specifically constituted to address problems of uncertainty.

Public health care with waiting time: the role of supplementary private health care.

We consider an economy where most of the health care is publicly provided, and where there is waiting time for several types of treatments. Private health care without waiting time is an option for the patients in the public health queue. We show that although patients with low waiting costs will choose public treatment, they may be better off with waiting time than without. The reason is that waiting time induces patients with high waiting costs to choose private treatment, thus reducing the cost of public health care that everyone pays for. Even if higher quality (i.e. zero waiting time) can be achieved at no cost, the self-selection induced redistribution may imply that it is socially optimal to provide health care publicly and at an inferior quality level. We give a detailed discussion of the circumstances in which it is optimal to have waiting time for public health treatment. Moreover, we study the interaction between this quality decision and the optimal tax/subsidy on private health care.

Allocating health care resources when people are risk averse with respect to life time.

The criterion of cost-effectiveness in health management may be given a welfare-theoretical justification if people are risk neutral with respect to life years. With risk aversion, the optimal allocation of health expenditures changes: Compared to the cost-effective allocation, more resources should be allocated to health conditions for which the expected outcomes even after treatment are worse than average. The consequences of medical interventions are usually not known with certainty. Given this type of uncertainty, simple application of cost-effectiveness analysis would recommend maximization of expected health benefits given the health budget. We show that when people are risk averse with respect to the number of life years they live, the uncertainty associated with different types of interventions should play a role in allocating the health budget.

Genetic testing when there is a mix of compulsory and voluntary health insurance.

When the insurer has access to information about test status, genetic insurance can handle the negative effects of genetic testing on insurance coverage and income distribution. Hence, efficient testing is promoted. When information about prevention and test status is private, two types of social inefficiencies may occur; genetic testing may not be done when it is socially efficient and genetic testing may be done although it is socially inefficient. The first type of inefficiency is shown to be likely for consumers with compulsory insurance only, while the second type of inefficiency is more likely for those who have supplemented the compulsory insurance with substantial voluntary insurance. This second type of inefficiency is more important the less effective prevention is. It is therefore a puzzle that many countries have imposed strict regulation on the genetic information insurers have access to. A reason may be that genetic insurance is not yet a political issue, and the advantage of shared genetic information is therefore not transparent.

Efficient use of health care resources: the interaction between improved health and reduced health related income loss.

Cost effectiveness is a criterion that is often recommended for prioritizing between different types of health care. A modified use of this criterion can be justified as the outcome of a choice that is made "behind a veil of ignorance." Reduced health will in many cases also gives an income loss that is shared between the patient and society ar large. In the special case where the marginal utilities of health status (measured by QALYs) and income are independent of the health state, an efficient allocation of health resources is characterized by net marginal costs per QALY being equalized across different types of health care. Net marginal costs are equal to gross marginal costs minus the reduction in health related income losses due to treatment. In the general case where marginal utilities depend on the health state this rule must be modified.