Post by Sapphire Capital on Aug 20, 2008 20:30:13 GMT 4
Health Insurance Policy Design and Competing Objectives
David P. Bernstein
affiliation not provided to SSRN
July 30, 2008
Abstract:
This paper evaluates the impact of three insurance policy parameters; the deductible, the coinsurance rate, and the out-of-pocket expense limit, on incentives for individuals to economize on health care spending, health plan costs, and household financial risk. High-deductible health plans are not highly effective at mitigating moral hazard problems associated with insurance because most individuals and most health care expenditure occurs from households with expenditures exceeding the plan deductible. High-deductible health plans are highly effective at reducing premiums because all individuals pay the entire deductible prior to receiving any insurance payments. Under some measures, high-deductible health plans impose less financial risk on households than high out-of-pocket or high coinsurance rate health plans. However, higher deductibles can impose substantial burdens on low-income households and reduce preventive medicine. The simulation results do not provide categorical guidance over the "best" form of cost sharing for health insurance policies.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1186253_code1060475.pdf?abstractid=1186253&mirid=1
David P. Bernstein
affiliation not provided to SSRN
July 30, 2008
Abstract:
This paper evaluates the impact of three insurance policy parameters; the deductible, the coinsurance rate, and the out-of-pocket expense limit, on incentives for individuals to economize on health care spending, health plan costs, and household financial risk. High-deductible health plans are not highly effective at mitigating moral hazard problems associated with insurance because most individuals and most health care expenditure occurs from households with expenditures exceeding the plan deductible. High-deductible health plans are highly effective at reducing premiums because all individuals pay the entire deductible prior to receiving any insurance payments. Under some measures, high-deductible health plans impose less financial risk on households than high out-of-pocket or high coinsurance rate health plans. However, higher deductibles can impose substantial burdens on low-income households and reduce preventive medicine. The simulation results do not provide categorical guidance over the "best" form of cost sharing for health insurance policies.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1186253_code1060475.pdf?abstractid=1186253&mirid=1