Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230168
Authors: 
Fels, Markus
Year of Publication: 
2020
Citation: 
[Journal:] Health Economics [ISSN:] 1099-1050 [Volume:] 29 [Issue:] 7 [Pages:] 827-840
Abstract: 
Cost‐sharing is regarded as an important tool to reduce moral hazard in health insurance. Contrary to standard prediction, however, such requirements are found to decrease utilization both of efficient and of inefficient care. I employ a simple model that incorporates two possible explanations—consumer mistakes and limited access—to assess the welfare implications of different insurance designs. I find cost‐sharing never to be an optimal solution as it produces two novel inefficiencies by limiting access. An alternative design, relying on bonuses, has no such side effects and achieves the same incentivization. I show how the optimal design can be deduced empirically and discuss possible impediments to its implementation.
Subjects: 
cost‐sharing
insurance rebates
limited access
moral hazard
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
Document Version: 
Published Version

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.