Minimum generosity levels in a competitive health insurance market
Remmerswaal,Minke Boone,Jan Douven,Rudy
Remmerswaal,Minke
Boone,Jan
Douven,Rudy
Abstract
An important condition for optimal health insurance is that the level of health care coverage is inversely related to the elasticity of demand. We show that this condition is not satisfied for voluntary deductibles in the Netherlands, which are optional deductibles on top of the mandatory deductible introduced by the Dutch government. We find that low-risk types, that mainly choose voluntary deductibles, have a lower elasticity of demand than high-risk types. Moreover, we show that voluntary deductibles introduce equity problems as it results in non-trivial cross subsidies from high-risk to low-risk types. Capping the level of voluntary deductibles (imposing minimum generosity) is likely to be welfare enhancing in the Netherlands.
Description
Copyright © 2023 The Authors. Published by Elsevier B.V. All rights reserved.
Date
2023-07
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
Adverse selection, Cost-sharing, Deductible, Healthcare expenditure, Moral hazard, Panel data
Citation
Remmerswaal, M, Boone, J & Douven, R 2023, 'Minimum generosity levels in a competitive health insurance market', Journal of Health Economics, vol. 90, 102782. https://doi.org/10.1016/j.jhealeco.2023.102782