The Role of the Government in the Affordable Care Act

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The affordable care act opens up new venues for malfeasance right I mean you mentioned in the book about what a huge amount is spent on lobbying the government by insurance companies and people in that sector. You have to think about how much should the government pay a private insurer to take a Medicare customer off its hands if the customer wants to go to that insurer. It's sort of a game of whack-a-mole well the government got smart to that and started collecting data on your past medical claims so they start pricing then on additional things but it doesn't help solve the problem entirely.

If you knew exactly when every person was going to die, or require medical care, you could make a killing buying and selling insurance. Nobody knows these things, of course -- the future is hard to predict -- but some people know something about the future that other people don't. This sets up adverse selection: the ability of one party to leverage information another party doesn't have, in order to gain an economic advantage. Economist Amy Finkelstein is an expert in this phenomenon, as well as the usefulness of empirical studies in economic research.

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Amy Finkelstein received her Ph.D. in economics from the Massachusetts Institute of Technology. She is currently John & Jennie S. MacDonald Professor of Economics at MIT. She is the co-director and research associate of the Public Economics Program at the National Bureau of Economic Research, and the co-Scientific Director of J-PAL North America. Among her awards are a MacArthur Fellowship and the John Bates Clark Medal. Her recent book, with co-authors Liran Einav and Ray Fisman, is Risky Business: Why Insurance Markets Fail and What to Do About It.

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