The Economics of Incentive-Based Health Care Plans
AbstractMedical savings accounts (MSAs) belong to a larger class of incentive-based health care plans. Using a model that allows the consumer to invest in healthy activities, we examine the efficiency properties of incentive plans and compare them to traditional full- coverage and deductible plans, under both experience rating and community rating. The model also is extended to include utilization of preventive health care. Properly constructed incentive plans have the capacity to induce socially efficient levels of healthy activities and preventive care, raising the expected wealth of consumers without reducing insurers' profits.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 1997-05.
Length: 23 pages
Date of creation: Jul 1997
Date of revision:
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- Joseph P. Newhouse, 1996. "Policy Watch: Medicare," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 159-167, Summer.
- Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
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