IDEAS home Printed from https://ideas.repec.org/a/rje/randje/v17y1986isummerp158-175.html
   My bibliography  Save this article

Rational Behavior in the Presence of Coverage Ceilings and Deductibles

Author

Listed:
  • Randall P. Ellis

Abstract

Consumers of health care services with insurance plan features such as deductibles, copayments, and coverage ceilings, in which the price of health care depends upon expenditures accumulated during a single year, should rationally anticipate the impact of current consumption decisions on the price of health care later in the year. We show that in the absence of wealth effects and risk aversion, a utility-maximizing consumer should base current consumption decisions on the expected end-of-year price of health care. In a specific model with risk aversion and lumpy consumption decisions we show that the expected end-of-year price remains close to the true shadow price of health care for plausible insurance plan and demand parameters. We use this result in an econometric model of the demand for ambulatory mental health services.

Suggested Citation

  • Randall P. Ellis, 1986. "Rational Behavior in the Presence of Coverage Ceilings and Deductibles," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 158-175, Summer.
  • Handle: RePEc:rje:randje:v:17:y:1986:i:summer:p:158-175
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0741-6261%28198622%2917%3A2%3C158%3ARBITPO%3E2.0.CO%3B2-9&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:17:y:1986:i:summer:p:158-175. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.