Kenneth Arrow and the Changing Economics of Health Care

"Why Arrow? Why Now?"

Over the past 40 years, health care has occupied an increasingly central and inextricable part of both the political debate and the national economy. Despite this development, however, the health care industry still faces many of the same questions about its economics as it did in the 1960s when Kenneth Arrow wrote his landmark article "Uncertainty and the Welfare Economics of Medical Care." Arrow's article has had tremendous impact on how we think about the economics of health care, and it has become standard-issue reading for students and professionals in health care policy and economics. In this introductory essay to a volume of retrospective pieces on Arrow's 1963 article, authors Hammer, Haas-Wilson and Sage discuss several aspects of Arrow's landmark work, including the history of the article's development, its impact, its critics and its modern relevance. This collection of essays by critics and commentators on Arrow's 1963 article, including new commentary by Arrow himself, is the result of a policy initiative by the Robert Wood Johnson Foundation's Investigator Awards in Health Policy Research program. The program, designed to foster broad, interdisciplinary thinking about the American health care system, helped form a group of award recipients that focuses on the proper role of competition in health care.