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Health insurance : treatment vs. compensation

Author

Listed:
  • Asheim,G.B.
  • Emblem,A.W.
  • Nilssen,T.

    (University of Oslo, Department of Economics)

Abstract

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Asheim,G.B. & Emblem,A.W. & Nilssen,T., 2000. "Health insurance : treatment vs. compensation," Memorandum 40/2000, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2000_040
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2000/Memo-40-2000.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Robert F. Graboyes, 2000. "Our money or your life : indemnities vs. deductibles in health insurance," Working Paper 00-04, Federal Reserve Bank of Richmond.
    3. 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.
    4. 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.
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    Citations

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    Cited by:

    1. Koc, Cagatay, 2004. "A theoretical rationale for an inelastic demand for health care," Economics Letters, Elsevier, vol. 82(1), pages 9-14, January.
    2. Asheim, Geir B. & Emblem, Anne Wenche & Nilssen, Tore, 2003. "Deductibles in Health Insurances: Pay or Pain?," Memorandum 13/2002, Oslo University, Department of Economics.
    3. Anne Emblem, 2002. "Redistribution at the Hospital," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 367-378, August.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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