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Reimbursing Preventive Care

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  • Francesca Barigozzi

    (Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy, e-mail: barigozz@spbo.unibo.it)

Abstract

The paper focuses on secondary prevention, such as diagnostic screening, medical examinations and checks-up, which refers to the early detection of disease. Secondary prevention is analyzed as a self-insurance activity reducing the negative shock of illness and can be either complement or substitute to illness treatment. This paper analyses the optimal reimbursement scheme for both prevention and treatment when each activity receives either a linear subsidy (i.e. cost sharing) or tax. Although optimal reimbursement systematically encourages treatment, it positively affects prevention if and only if prevention reduces the cost of treatment, that is in the case the two activities are substitutes. The Geneva Papers on Risk and Insurance Theory (2004) 29, 165–186. doi:10.1023/B:GEPA.0000046568.15758.12

Suggested Citation

  • Francesca Barigozzi, 2004. "Reimbursing Preventive Care," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 29(2), pages 165-186, December.
    • Handle: RePEc:pal:genrir:v:29:y:2004:i:2:p:165-186
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    1. Francesca Barigozzi & Renaud Bourlès & Dominique Henriet & Giuseppe Pignataro, 2017. "Pool size and the sustainability of optimal risk-sharing agreements," Theory and Decision, Springer, vol. 82(2), pages 273-303, February.
    2. Francesca Barigozzi, 2006. "Supplementary Insurance with 'ex post' moral hazard: efficiency and redistribution," Annals of Economics and Statistics, GENES, issue 83-84, pages 295-325.
    3. Ellis, Randall P. & Manning, Willard G., 2007. "Optimal health insurance for prevention and treatment," Journal of Health Economics, Elsevier, vol. 26(6), pages 1128-1150, December.
    4. Udo Schneider & Jürgen Zerth, 2011. "Improving Prevention Compliance through Appropriate Incentives: Theoretical Modelling and Empirical Evidence," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(I), pages 71-106, March.
    5. Schneider, Udo & Zerth, Jürgen, 2008. "Improving prevention compliance through appropriate incentives," MPRA Paper 8280, University Library of Munich, Germany.
    6. Pannequin, François & Corcos, Anne & Montmarquette, Claude, 2020. "Are insurance and self-insurance substitutes? An experimental approach," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 797-811.
    7. Seog, S. Hun & Hong, Jimin, 2024. "Moral hazard in loss reduction and state-dependent utility," Insurance: Mathematics and Economics, Elsevier, vol. 115(C), pages 151-168.

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