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Basic Versus Supplementary Health Insurance : Moral Hazard and Adverse Selection

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  • Boone, J.

    (Tilburg University, TILEC)

Abstract

This paper introduces a tractable model of health insurance with both moral hazard and adverse selection. We show that government sponsored universal basic insurance should cover treatments with the biggest adverse selection problems. Treatments not covered by basic insurance can be covered on the private supplementary insurance market. Surprisingly, the cost effectiveness of a treatment does not affect its priority to be covered by basic insurance.

Suggested Citation

  • Boone, J., 2014. "Basic Versus Supplementary Health Insurance : Moral Hazard and Adverse Selection," Discussion Paper 2014-034, Tilburg University, Tilburg Law and Economic Center.
  • Handle: RePEc:tiu:tiutil:6bf0e55c-e004-4c9e-8065-6bf52e752596
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    References listed on IDEAS

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    1. Drummond, Michael F. & Sculpher, Mark J. & Torrance, George W. & O'Brien, Bernie J. & Stoddart, Greg L., 2005. "Methods for the Economic Evaluation of Health Care Programmes," OUP Catalogue, Oxford University Press, edition 3, number 9780198529453.
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    3. Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
    4. Boone, J., 2014. "Basic versus Supplementary Health Insurance : The Role of Cost Effectiveness and Prevalence," Discussion Paper 2014-065, Tilburg University, Center for Economic Research.
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    Cited by:

    1. Boone, Jan, 2015. "Basic versus supplementary health insurance: Moral hazard and adverse selection," Journal of Public Economics, Elsevier, vol. 128(C), pages 50-58.
    2. repec:eee:jhecon:v:60:y:2018:i:c:p:53-74 is not listed on IDEAS
    3. repec:rnp:ecopol:ep1826 is not listed on IDEAS

    More about this item

    Keywords

    universal basic health insurance; voluntary supplementary insurance ; public vs private insurance; adverse selection; moral hazard; cost effectiveness;

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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