since medical spending is unproductive under the current state of technology. Even if
insurance were free, it would have no value. Gains in welfare in this scenario can come
only from reducing the price of health through medical innovation.
Now consider the other extreme when medical innovation progresses in a way that
more health can be obtained for successively lower amounts of medical care spending.
This implies in the extreme there is no loss in health and there are minimal resources
used to restore health upon a health shock. In this case, expected utility converges to
U(Y, H
0
). With the most extr ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month, and much more.