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|NBER Insurance and Innovation in Health Care Markets|
National Bureau of Economic Research [NBER]
Sept. 15, 2005
Excerpt: Innovation policy often involves an uncomfortable trade-off between rewarding innovators sufficiently and providing the innovation at the lowest possible price. However, in health care markets with insurance for innovative goods, society may be able to ensure efficient rewards for inventors and the efficient dissemination of inventions. Health insurance resembles a two-part pricing contract in which a group of consumers pay an up-front fee ex ante in exchange for a fixed unit[.]
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