Health insurance : treatment vs. compensation
In this paper, we view health insurance as a combined hedge against the two consequences of falling ill: treatment expenditures and loss in income. We discuss how an individual’s ability when healthy affects her decision on whether to buy health insurance with treatment to full recovery if ill or with partial treatment combined with cash compensation for the resulting loss in income. We find that a highability individual demands full recovery and is fully insured, while a low-ability individual demands partial treatment and cash compensation and is only partly insured.
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|Date of creation:||2000|
|Contact details of provider:|| Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway|
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zeckhauser, Richard, 1970. "Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives," Journal of Economic Theory, Elsevier, vol. 2(1), pages 10-26, March.
- Byrne, Margaret M. & Thompson, Peter, 2000. "Death and dignity: Terminal illness and the market for non-treatment," Journal of Public Economics, Elsevier, vol. 76(2), pages 263-294, May.
- Haveman, Robert & Wolfe, Barbara, 2000. "The economics of disability and disability policy," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 18, pages 995-1051 Elsevier.
- Robert F. Graboyes, 2000. "Our money or your life : indemnities vs. deductibles in health insurance," Working Paper 00-04, Federal Reserve Bank of Richmond.
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