Kenneth Arrow passed yesterday. He was my second favorite economist who made their bones in the 50s and 60s. Much like Herb Simon (my favorite) he makes my head hurt whenever I try to think hard about what he is saying in whatever field he is commenting on and thus leading it in a new, intriguing and useful direction. Here is a link to his seminal healthcare insight and paper
The key insight is that the medical market operates under massive uncertainty and time variance of knowledge. Risk can be priced but uncertainty can not be priced. This leads to extraordinarily inefficient outcomes if we assume a traditional competitive market framework.
If you want to gain a good understanding of health policy, read this paper and then read Akerlof’s Lemons paper. And then reread them until your head hurts.
We lost a giant but his ideas and influence will remain.