Market failure in insurance markets

The health insurance market has always been different from classical product markets through the effects of severe market failures. The degree of government intervention in such insurance markets has been a point of discussion in academic literature and policymaking for a long time. This thesis provides an overview of two relevant academic articles and discusses two insurance models, the Wilson model and the Miyazaki-Spence model. Afterwards, we apply these models on the reform in the Dutch health insurance market in 2006. The aim of this thesis is to assess the most important part of the reform, the universal mandatory basic insurance after 2006 in The Netherlands. Although the used models not precisely correspond with the reform they still give a extensive relevant intuition about the effect of government intervention in the health insurance market. We argue after the analysis that this reform has a positive effect on welfare.