Jonathan Gruber continues his two part treatment of health care within MIT's 14.41, Public Finance and Public Policy. Building on the prior lecture's setup of the economic case for government intervention in health markets, Gruber works through the specifics of health insurance economics: adverse selection, moral hazard, and how these market failures shape the design of programs like Medicare and Medicaid. He uses the federal budget's health spending share, the largest line item in most developed economies, as the throughline for why these design questions carry real fiscal weight. Expect chalkboard-style derivations, policy tradeoffs laid out with supply and demand reasoning, and running reference to U.S. health policy debates. Part of the same OCW course as the preceding health care lecture, this session assumes that earlier material as background.