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Deductibles in Health Insurance: Pay or Pain?

Author

Listed:
  • Asheim, Geir B.

    () (Department of Economics)

  • Nilssen, Tore

    () (Department of Economics)

  • Emblem, Anne Wenche

    () (School of Management)

Abstract

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.

Suggested Citation

  • Asheim, Geir B. & Nilssen, Tore & Emblem, Anne Wenche, 2009. "Deductibles in Health Insurance: Pay or Pain?," HERO On line Working Paper Series 2002:13, Oslo University, Health Economics Research Programme.
  • Handle: RePEc:hhs:oslohe:2002_013
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    File URL: http://www.hero.uio.no/publicat/2002/HERO2002_13.pdf
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    References listed on IDEAS

    as
    1. Asheim,G.B. & Emblem,A.W. & Nilssen,T., 2000. "Health insurance : treatment vs. compensation," Memorandum 40/2000, Oslo University, Department of Economics.
    2. 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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    Cited by:

    1. Karolin Becker & Peter Zweifel, 2005. "Cost Sharing in Health Insurance: An Instrument for Risk Selection?," SOI - Working Papers 0513, Socioeconomic Institute - University of Zurich.
    2. Asheim, Geir B. & Emblem, Anne Wenche & Nilssen, Tore, 2010. "Health insurance: Medical treatment vs disability payment," Research in Economics, Elsevier, vol. 64(3), pages 137-145, September.

    More about this item

    Keywords

    Health insurance; adverse selection; deductibles;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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