Deductibles in Health Insurance: Pay or Pain?
We study a health-insurance market where individuals are offered coverage against both medical expenditures and losses in income. Individuals vary in their level of innate ability. If there is private information about the probability of illness and an individual’s innate ability is sufficiently low, we find that competitive insurance contracts yield screening partly in the form of co-payment, i.e., a deductible in pay, and partly in the form of reduced medical treatment, i.e., a deductible in pain.
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- Asheim, Geir & Nilssen, Tore & Emblem, Anne Wenche, 2009.
"Health Insurance: Treatment vs. Compensation,"
HERO On line Working Paper Series
2001:1, Oslo University, Health Economics Research Programme.
- Frech, H. III, 1994. "State-dependent utility and the tort system as insurance: Strict liability versus negligence," International Review of Law and Economics, Elsevier, vol. 14(3), pages 261-271, September.
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