cover image: Income disparity, inequality aversion, and the design of the health care system

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Income disparity, inequality aversion, and the design of the health care system

10 Nov 2003

Hammond [6] de nes two kinds of non-paternalistic social welfare function that can be employed under these circumstances.2 The ex ante social welfare function is a function of the expected utilities, while the ex post social welfare function is the expectation of a function of the realized utilities. [...] Under each system the health care of the agents in each group (the rich or the poor) is covered by an insurance program that is nanced by a levy on the incomes of the agents in that group, implying ci = yi mi i = R;P (3) The health care system is not permitted to redistribute income between the two groups. [...] The function r shows the relative value of increases in the utility of the healthy and the utility of the sick in each group under the social welfare function W: Speci cally, an increase in the utility of the healthy raises social welfare by only r times as much as an increase in the utility of the sick. [...] The bene t of an additional unit of consumption is given by the rst two terms of f. The increase in consumption bene ts both the healthy, who have measure 1 , and the sick, who have measure : The gains of the healthy are weighted by the factor r because their gains have a smaller impact on social welfare than the gains of the sick. [...] The sign of the slope of the locus is the negative of the sign of the derivative f1 = (1 )r 0 1u + (1 )ru00 + v11 v12 Inspection of this expression shows that the sign of the rst term is indetermi- nate, while the remaining terms the adjustments to the marginal utilities are negative.
health government politics economics economy insurance public health medical economics health insurance health policy medical policy income welfare economics, medical income disparity values society economic inequality healthcare policy government health care public sphere redistribution of income and wealth social condition

Authors

Leach, John

Pages
17
Published in
Canada

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