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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 Online Working Paper Series 2002:13, University of Oslo, 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Owoeye, Olumide Bamidele & Olaiya, Samuel, 2016. "Effect of Health Insurance on the Demand on the Demand for Health care in Oyo State, Nigeria," MPRA Paper 87986, University Library of Munich, Germany, revised 2017.
    3. Karolin Becker & Peter Zweifel, 2005. "Cost Sharing in Health Insurance: An Instrument for Risk Selection?," SOI - Working Papers 0513, Socioeconomic Institute - University of Zurich.

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    More about this item

    Keywords

    Health insurance; adverse selection; deductibles;
    All these keywords.

    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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