Research Seminar Series
Gerard Russo, PhD
Associate Professor of Economics
University of Hawaii
and the Quality of Chronic Kidney Disease Care"
November 2, 2001,
Colonial Penn Center Auditorium
The optimal public insurance-taxation scheme is derived for a model with unobservable outcomes. If the government can only observe aggregate commodity expenditures, reimbursement insurance is constrained-efficient. However, two distortions accompany. First, consumers are induced to take (forego) actions which increase (decrease) the likelihood of adverse outcomes (i.e., "ex ante" moral hazard). Second, reimbursement insurance creates a subsidy distortion (i.e, "ex post" moral hazard). "Ex ante" moral hazard calls for taxation (subsidization) of commodities which increase (decrease) the probability of adverse outcomes. The second distortion calls for taxation (subsidization) of commodities which are complements to (substitutes for) the insured commodity. An example centered on cigarettes and medical insurance is presented.
Gerard Russo is Associate Professor at the Department of Economics, University of Hawaii where he teaches microeconomic theory and health economics. Dr. Russo specializes in health economics and health policy. His research interests include health insurance and health care financing, the economics of smoking policy, and the economics of HIV/AIDS screening and prevention. Dr. Russo has been affiliated with the East-West Center since 1989 and where he is currently an Adjunct Fellow. He has traveled extensively in Asia and has conducted funded research and training in Indonesia, Pakistan, the Philippines, Taiwan and Thailand. His publications include articles in AIDS & Public Policy Journal, the ASEAN Economic Bulletin, the Asia-Pacific Journal of Public Health and, Social Science & Medicine.
Dr. Russo was awarded a Ph.D. degree in economics from Northwestern University in 1989, the M.A. degree from the University of Delaware in 1981 and the B.A degree from the George Washington University in 1977. Before joining the University of Hawaii in 1987, Dr. Russo was a visiting instructor at the University of Wisconsin-Madison. He has also held instructional positions at Northwestern University, the University of Delaware and De Paul University. Dr. Russo has provided consulting services and technical assistance to the Asian Development Bank (ADB) and the United States Agency for International Development (USAID).