nep-hea New Economics Papers
on Health Economics
Issue of 2016‒11‒27
twenty-one papers chosen by
Yong Yin
SUNY at Buffalo

  1. STONEWORKING HEALTH RISKS: SILICA AND TOTAL DUST By Devina Kemmy; Audrey Adhisty; Yashinta Astia Junia Putri; Hikmah Dyah Permata Sari; Miski Irfani
  2. The Evolution of Health Insurer Costs in Massachusetts, 2010-12 By Kate Ho; Ariel Pakes; Mark Shepard
  3. Gender, Marriage, and Life Expectancy By Margherita Borella; Mariacristina De Nardi; Fang Yang
  5. Screening in Contract Design: Evidence from the ACA Health Insurance Exchanges By Michael Geruso; Timothy J. Layton; Daniel Prinz
  6. The Affordable Care Act as Retiree Health Insurance: Implications for Retirement and Social Security Claiming By Alan L. Gustman; Thomas L. Steinmeier; Nahid Tabatabai
  7. Hospital Competition, Quality, and Expenditures in the U.S. Medicare Population By Carrie Colla; Julie Bynum; Andrea Austin; Jonathan Skinner
  8. Impact of the city environment on human health: the case of the city of Beni Mellal in Morocco By Sanaa SABOUR ALAOUI; Barge Nadia
  9. Sociodemographic factors and expenditure issues in Vietnamese consideration of periodic general health examination By Quan-Hoang Vuong; Quang-Hoi Vu
  10. Childhood obesity and maternal education in Ireland By David Madden
  11. Do Doctors Prescribe Antibiotics Out of Fear of Malpractice? By Sebastian Panthöfer
  12. The socioeconomic gradient in health: The role of intra-household resource allocation By Bárcena, Elena; Blázquez, Maite; Moro-Egido, Ana I.
  13. Childhood Obesity and Maternal Education in Ireland By David Madden
  14. The role of youth mental health services in the treatment of young people with serious mental illness: two-year outcomes and economic implications By Nicola Brimblecombe; Martin Knapp; Silvia Murguia; Henrietta Mbeah-Bankas; Steve Crane; Abi Harris; Sara Evans-Lacko; Vittoria Ardino; Valentina Iemmi; Derek King
  15. Health Shocks and Permanent Income Loss: the Household Business Channel By Axel Demenet
  16. Can Insurance Mitigate Household Businesses’ Vulnerability to Health Shocks? By Axel Demenet
  17. Health and Health Inequality during the Great Recession: Evidence from the PSID By Huixia Wang; Chenggang Wang; Timothy J. Halliday
  18. The Life-saving Effect of Hospital Proximity By Paola Bertoli; Veronica Grembi
  19. Pay less, consume more? Estimating the price elasticity of demand for home care services of the disabled elderly By Quitterie Roquebert; Marianne Tenand
  20. Performance and Inequality in Health: A Comparison of Child and Maternal Health across Asia By Bénédicte H. Apouey; Jacques Silber
  21. A note on health insurance under ex post moral hazard By Pierre Picard

  1. By: Devina Kemmy (Universitas Indonesia); Audrey Adhisty (Universitas Indonesia); Yashinta Astia Junia Putri (Universitas Indonesia); Hikmah Dyah Permata Sari (Universitas Indonesia); Miski Irfani (Universitas Indonesia)
    Abstract: The popularity of colored gemstone is skyrocketing. The grinding process produces dust and silica that will expose the workers. Thus, will impair the workers’ health particularly in their respiratory system. NIOSH Manual of Analytical Methods 0500 and NIOSH Manual of Analytical Methods 7602 are used for total dust and silica. There were two workers that were being sampled with personal sampling method – one for total dust and one for silica. The results of this sampling are 2.22 mg/m3 and 0.4981 mg/m3 for total dust and silica. Both of the results are below OSHA PEL, but exceeding ACGIH TLV for silica.
    Keywords: total dust, silica, gemstone workers
    JEL: I19
  2. By: Kate Ho; Ariel Pakes; Mark Shepard
    Abstract: We analyze the evolution of health insurer costs in Massachusetts between 2010-2012, a period in which the use of physician cost control incentives spread among insurers. We show that the growth of costs and its relationship to the introduction of cost control incentives cannot be understood without accounting for (i) consumers’ switching between plans, and (ii) differences in cost characteristics between new entrants and those leaving the market. New entrants are markedly less costly than those leaving (and their costs fall after their entering year), so cost growth of those who stay in a plan is significantly higher than average per-member cost growth. Cost control incentives were used by Health Maintenance Organizations (HMOs). Relatively high-cost HMO members switched to Preferred Provider Organizations (PPOs) while low-cost PPO members switched to HMOs. As a result, the impact of cost control incentives on HMO costs is likely different from their impact on market-wide insurer costs.
    JEL: I11 I13 L10
    Date: 2016–11
  3. By: Margherita Borella; Mariacristina De Nardi; Fang Yang
    Abstract: Wages and life expectancy, as well as labor market outcomes, savings, and consumption, differ by gender and marital status. In this paper we compare the aggregate implications of two dynamic structural models. The first model is a standard, quantitative, life-cycle economy, in which people are only heterogenous by age and realized earnings shocks, and is calibrated using data on men, as typically done. The second model is one in which people are also heterogeneous by gender, marital status, wages, and life expectancy, and is calibrated using data for married and single men and women. We show that the standard life-cycle economy misses important aspects of aggregate savings, labor supply, earnings, and consumption. In contrast, the model with richer heterogeneity by gender, marital status, wage, and life expectancy matches the observed data well. We also show that the effects of changing life expectancy and the gender wage gap depend on marital status and gender, and that it is essential to not only model couples, but also the labor supply response of both men and women in a couple.
    JEL: D1 E1 E21
    Date: 2016–11
  4. By: Neslihan Lök (Selçuk Üniversitesi); Sefa Lok (Selçuk University); Muammer Canbaz (Selcuklu Anatolian School)
    Abstract: Objectives:Physical activity might have positive influences on diminishing anxiety, stress and depression; sustaining mental health and providing liveliness. This study is conducted in order to evaluate the influence of “Physical Activity Program†applied on elders in nursing home on the depressive symptoms and quality of life. Methods of research:This study is designed in experimental manner with pretest posttest design. The population of the study is determined according to the inclusion exclusion criteria and it includes 80 individuals aged over 65 (40 experimental group and 40 control group) who live in nursing home belonging to Metropolitan Municipality. Prepared in compliance with the literature, the “Physical Activity Program†comprises of 10 minutes of warm up, 20 minutes of rhythmic exercise, 10 minutes of cool down and 30 minutes of free walking and it is applied under the supervision of the researchers four times a week for ten weeks in total. As pretest posttest design, the data is collected with socio-demographic features information form, Beck depression scale and SF 36 quality of life scale. For the evaluation of the data, Wilcoxon signed rank test, Mann Whitney U and Oneway ANOWA tests are utilized. Results: While it is detected that the score averages of the depression scale of the individuals in the experimental group of the research before the Physical Activity Program decreases by the end of the program (p
    Keywords: Elders, Physical Activity Program, Depression, Quality of Life
  5. By: Michael Geruso; Timothy J. Layton; Daniel Prinz
    Abstract: By steering patients to cost-effective substitutes, the tiered design of prescription drug formularies can improve the efficiency of healthcare consumption in the presence of moral hazard. However, a long theoretical literature describes how contract design can also be used to screen consumers by profitability. In this paper, we study this type of screening in the ACA Health Insurance Exchanges. We first show that despite large regulatory transfers that neutralize selection incentives for most consumer types, some consumers are unprofitable in a way that is predictable by their prescription drug demand. Then, using a difference-in-differences strategy that compares Exchange formularies where these selection incentives exist to employer plan formularies where they do not, we show that Exchange insurers design formularies as screening devices that are differentially unattractive to unprofitable consumer types. This results in inefficiently low levels of coverage for the corresponding drugs in equilibrium. Although this type of contract distortion has been highlighted in the prior theoretical literature, until now empirical evidence has been rare. The impact on out-of-pocket costs for consumers affected by the distortion is substantial—potentially thousands of dollars per year—and the distortion creates an equilibrium in which contracts that efficiently trade off moral hazard and risk protection cannot exist.
    JEL: I11 I13 I18
    Date: 2016–11
  6. By: Alan L. Gustman; Thomas L. Steinmeier; Nahid Tabatabai
    Abstract: Using data from the Health and Retirement Study, we examine the effects of the Affordable Care Act (ACA) on retirement. We first calculate retirements (and in related analyses changes in expected ages of retirement and/or Social Security claiming) between 2010, before ACA, and 2014, after ACA, for those with health insurance at work but not in retirement. This group experienced the sharpest change in retirement incentives from ACA. We then compare retirement measures for those with health insurance at work but not in retirement with retirement measures for two other groups, those who, before ACA, had employer provided health insurance both at work and in retirement, and those who had no health insurance either at work or in retirement. To complete a difference-in-difference analysis, we make the same calculations for members of an older cohort over the same age span. We find no evidence that ACA increases the propensity to retire or changes the retirement expectations of those who, before ACA, had coverage when working but not when retired. An analysis based on a structural retirement model suggests that eventually ACA will increase the probability of retirement by those who initially had health insurance on the job but did not have employer provided retiree health insurance. But the retirement increase is quite small, only about half a percentage point at each year of age. The model also suggests that much of the effect of ACA on retirement will be realized within a few years of the change in the law.
    JEL: D91 E21 H55 I13 J14 J18 J26 J32
    Date: 2016–11
  7. By: Carrie Colla; Julie Bynum; Andrea Austin; Jonathan Skinner
    Abstract: Theoretical models of competition with fixed prices suggest that hospitals should compete by increasing quality of care for diseases with the greatest profitability and demand elasticity. Most empirical evidence regarding hospital competition is limited to heart attacks, which in the U.S. generate positive profit margins but exhibit very low demand elasticity – ambulances usually take patients to the closest (or affiliated) hospital. In this paper, we derive a theoretically appropriate measure of market concentration in a fixed-price model, and use differential travel-time to hospitals in each of the 306 U.S. regional hospital markets to instrument for market concentration. We then estimate the model using risk-adjusted Medicare data for several different population cohorts: heart attacks (low demand elasticity), hip and knee replacements (high demand elasticity) and dementia patients (low demand elasticity, low or negative profitability). First, we find little correlation within hospitals across quality measures. And second, while we replicate the standard result that greater competition leads to higher quality in some (but not all) measures of heart attack quality, we find essentially no association between competition and quality for what should be the most competitive markets – elective hip and knee replacements. Consistent with the model, competition is associated with lower quality care among dementia patients, suggesting that competition could induce hospitals to discourage unprofitable patients.
    JEL: I11 L31 L4
    Date: 2016–11
  8. By: Sanaa SABOUR ALAOUI (Polydisciplinary Faculty Beni-Mellal); Barge Nadia (polydisciplinqry faculty of beni mellal)
    Abstract: BACKGROUNDToday, the number of allergy is increasing in industrialized countries. The World Health Organization (WHO) classifies allergic diseases to be the fourth in the world of affections. WHO considers that these diseases are a major public health problem in terms of quality of life, loss of work days, teaching, drug and even mortality cost.The frequency of respiratory allergies including asthma and allergic rhinitis due to pollens is increasing in the young and urban dwellers in developed countries. METHODS: For this project, we chose Polydisciplinary Faculty of Beni-Mellal (FPBM) located in the center of Morocco as a place for the study of pollen allergy. It is a public institution of higher education, that receives thousands of students from different parts of the region which is characterized by its vegetation richness. The project was to study pollen allergy in FPBM in an effective sample of 529 randomly chosen within a range of about 7,000 students. A survey was made for a descriptive studies. Results: The percentage of students allergic to pollen surveyed in the FPBM was 39%. This percentage was within the confidence interval of all students in the allergic FPBM [35%; 44%] estimated 5% error risk. This results prove that our sample was representative. We also found that the allergic to pollen presents a significant percentage of 40.5% for female compared to 36.6% for male. Our study shows that the olive tree is the main allergen causing pollen allergy. The majority of the surveyed students are allergic to one or two types of plants. The most common symptoms of pollen allergy among its students are the nasal symptoms (sneezing and nasal itching).This study shows that most students have allergies in the spring season. Our study shows also that the cross-reactivity between pollen and food was the most dominant CONCLUSIONS: The high percentage of students allergic to pollen surveyed in the FPBM might be explained by the wealth of the region in vegetation. We suggested that the difference seen beteween female and male is due to physiological and hormonal differences between the sexes. Olive tree was the main allergen ,this can be explained by the richness of the region of Beni-Mellal-Khénifra with this plant.
    Keywords: Survey, Pollen allergy, symptoms, FPBM, Olive tree, cross-reactivity
    JEL: I10
  9. By: Quan-Hoang Vuong; Quang-Hoi Vu
    Abstract: Medical expenditure is perceived as a major obstacle for people wanting to access healthcare services in general, and in particular periodic general health examinations (GHE). However, the extant literature concerning expenditure on periodic health examinations in Vietnam is rather scarce and lacking in specific figures. Therefore, this article aims to examine the price people are willing to pay to take GHE periodically. From analyzing a dataset of 2,068 subjects collected from Hanoi and its vicinities, our study confirms that demographic factors (gender, job status, marital status) and socioeconomic factors (health insurance, low belief in healthcare quality and perceptions on public’s health status) have significant effects on GHE fees. The probability of people accepting to spend a larger sum (>VND2mn) for periodic GHE is relatively low (
    Keywords: Medical expenditure; general health examination; public perception; Vietnam
    JEL: I12 I18 P20
    Date: 2016–11–21
  10. By: David Madden (Geary Institute for Public Policy and School of Economics, University College Dublin)
    Abstract: This paper analyses the socioeconomic gradient of chilidhood obesity in Ireland using the Growing Up in Ireland data with three innovations compared to previous work in the area. A different measure of socioeconomic status, maternal education, is employed. In addition, the depth and severity of obesity are examined as well as the incidence. Finally, the use of two waves of longitudinal data permits the analysis of the persistence of obesity. Results show that overall childhood obesity stabilised between the two waves. However the socioeconomic gradient becomes steeper in wave 2 for girls and in particular when depth, severity and persistence of obesity are accounted for. Girls whose mothers fail to complete secondary education are shown to be at a particular disadvantage.
    Keywords: Obesity, socioeconomic gradient, persistence
    JEL: I14 I31 J13
    Date: 2016–11–21
  11. By: Sebastian Panthöfer
    Abstract: This paper investigates whether doctors prescribe antibiotics to protect themselves against potential malpractice claims. Using data from the National Ambulatory Medical Care Survey on more than half a million outpatient visits between 1993 and 2011, I find that doctors are 6% less likely to prescribe antibiotics after the introduction of a cap on noneconomic damages. Over 140 million discharge records from the Nationwide Inpatient Sample do not reveal a corresponding change in hospital stays for conditions that can potentially be avoided through antibiotic use in the outpatient setting. These findings, as well as a stylized model of antibiotic prescribing under the threat of malpractice, suggest that liability-reducing tort reforms can decrease the amount of antibiotics that are inappropriately prescribed for defensive reasons.
    JEL: I11 I18 K13
    Date: 2016–11–21
  12. By: Bárcena, Elena (Departamento de Estadística y Econometría, Universidad de Málaga.); Blázquez, Maite (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Moro-Egido, Ana I. (Departamento de Teoría e Historia Económica, Universidad de Granada.)
    Abstract: This paper aims to analyse the impact of different household financial regimes on the health status of males and females in a number of European countries. Using the EU-SILC 2010 on intra-household sharing of resources, we find that each member of the couple is worse off if his/her partner has most decision-making responsibilities. Additionally, the presence of children in the household plays a role in the effect that household financial regimens exert on individual self-assessed health, especially among females. We conclude that family arrangements regarding resource allocation and decision-making have important consequences and should be given some attention in the task of identifying individuals predisposed to health problems.
    Keywords: self-assessed health, intra-household allocation, decision-making process, financial regime
    JEL: C21 D13 I14
    Date: 2016–11
  13. By: David Madden
    Abstract: This paper analyses the socioeconomic gradient of chilidhood obesity in Ireland using the Growing Up in Ireland data with three innovations compared to previous work in the area. A different measure of socioeconomic status, maternal education, is employed. In addition, the depth and severity of obesity are examined as well as the incidence. Finally, the use of two waves of longitudinal data permits the analysis of the persistence of obesity. Results show that overall childhood obesity stabilised between the two waves. However the socioeconomic gradient becomes steeper in wave 2 for girls and in particular when depth, severity and persistence of obesity are accounted for. Girls whose mothers fail to complete secondary education are shown to be at a particular disadvantage.
    Keywords: Obesity; Socioeconomic gradient; Persistence
    JEL: I14 I31 J13
    Date: 2016–11
  14. By: Nicola Brimblecombe; Martin Knapp; Silvia Murguia; Henrietta Mbeah-Bankas; Steve Crane; Abi Harris; Sara Evans-Lacko; Vittoria Ardino; Valentina Iemmi; Derek King
    Abstract: Aim: To evaluate the outcomes and economic case for a UK innovative youth-specific mental health service for 16 to 25 year olds. Methods: A pre-, during- and post-treatment comparative design for twenty young people at high risk of developing psychosis who received two years’ treatment with the service, using outcomes that concurred with the service aims: changes in mental health, employment rates and service use. Results: 45% of those at risk and with symptoms of serious mental illness commencing treatment were not receiving mental health services at baseline.. Compared to service use prior to treatment at the youth-specific service, hospital admissions, A&E and criminal justice system use appear to decrease over the two years of treatment and the year after treatment, with potential cost differences of £473,000. Mental health improved or stayed the same, compared to baseline. Employment rates improved, although the sample size for this is very small. Potential cost differences associated with service users moving into employment over the two years are £148,000. The estimated cost over two years of providing the youth-specific mental health service to these young people was £106,000. Conclusions: Given the extensive long-term negative consequences and high costs of untreated mental illness in the 16 to 25 age group and the documented problems young people have in receiving appropriate services, this youth-specific, age-appropriate service model appears to be successful, with improved outcomes and cost differences in the short-term, and with encouraging implications for the longer term.
    Keywords: adolescent health services; costs; evaluation; mental health services; young adult
    JEL: E6
    Date: 2015–09–01
  15. By: Axel Demenet (DIAL, UMR 225, IRD, Paris, France, PSL Research University, Université Paris-Dauphine, LEDa, Paris, France)
    Abstract: This study uses an original Vietnamese panel data to provide strong evidence that microenterprises are vulnerable to health shocks affecting their operators and/or other household members. Although intra-household labour reallocation mitigates the direct labour supply decrease, large out-of- pocket health expenditures have the potential of crowding out business-related expenditure, and to significantly decrease investment. The costs associated with illness thus affect directly the household businesses that generate income for countless individuals around the developing world. These results have important implications, among which the underestimation of the positive externalities of health insurance schemes.
    JEL: I15 E26 O17
    Date: 2016–10
  16. By: Axel Demenet (DIAL, UMR 225, IRD, Paris, France, PSL Research University, Université Paris-Dauphine, LEDa, Paris, France)
    Abstract: Household Businesses (HB) are vulnerable to health shocks affecting all members of the household to which they belong. The monetary costs of these shocks affect HB revenue and investment. Health insurance, by offering financial protection against catastrophic health expenditures and increasing health care utilisation, should mitigate this specific vulnerability. A 2005 reform giving free health insurance to children under 6 in Vietnam introduced a discontinuity in the coverage of children, and lets evaluating the influence of insurance in this regard. The change allows comparing otherwise similar household businesses that differ only by the proportion of insured children in the household. The results show that health insurance did not decrease health expenditures, and neither increased the number of days during which the HB operated. The potential of health insurance to mitigate the effect of health shocks on informal microenterprises is conditional on the actual level of financial protection offered –which was low in this context. I nevertheless evidence a potential peace of mind effect: health insurance can stimulate investment, at least temporarily, even while no actual mitigating effect exists.
    Keywords: informal sector, microenterprises, household business, health insurance
    JEL: O17 I13 I15
    Date: 2016–10
  17. By: Huixia Wang (Hunan University, School of Economy and Trade); Chenggang Wang (University of Hawaii at Manoa, Department of Economics); Timothy J. Halliday (University of Hawaii at Manoa, Department of Economics; University of Hawaii Economic Research Organization; IZA)
    Abstract: We employ granular information on local macroeconomic conditions from the Panel Study of Income Dynamics to estimate the impact of the Great Recession on health and health-related behaviors. Among working-aged adults, a one percentage point increase in the county-level unemployment rate resulted in a 2.4-3.2% increase in chronic drinking, a 1.8-1.9% decrease in mental health status, and a 7.8-8.9% increase in reports of poor health. Notably, there was heterogeneity in the impact of the recession across socioeconomic groups. Particularly, obesity and overweight rates increased for blacks and high school educated people, while there is weak evidence that they decreased for whites and the college educated. Along some dimensions, the Great Recession may have widened some socioeconomic health disparities in the United States.
    Keywords: Great Recession, Health Behaviors, Health Outcomes, Obesity, Inequality
    Date: 2016–11
  18. By: Paola Bertoli; Veronica Grembi
    Abstract: We provide a new assessment of the effect of hospital proximity in an emergency situation exploiting the exogenous variation in the proximity to cities that are legally allowed to have a hospital based on their population size. Based on Italian municipal data, our instrumental variable results show that a one-standard-deviation increase in the distance to the nearest hospital (5 km) raises the fatality rate by 13.84% at the sample average. This figure is equal to 0.92 additional deaths per 100 accidents. We show that both OLS and DD estimates, generally used in the literature, provide a downward-biased measure of the true effect of hospital proximity because they do not fully solve spatial sorting problems. Proximity is more important when the level of road safety is low, when emergency services are less responsive, and when the nearest hospital has relatively low quality standards.
    Keywords: access to care; hospital proximity; road-traffic accidents; instrumental variables; difference in differences;
    JEL: C26 I10 R41
    Date: 2016–05
  19. By: Quitterie Roquebert (UP1 - Université Paris 1, Panthéon-Sorbonne - Université Paris I - Panthéon-Sorbonne - Pres Hesam); Marianne Tenand (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC))
    Abstract: Although the consumption of home care is increasing with population ageing, little is known about its price sensitivity. This paper estimates the price elasticity of the demand for home care of the disabled elderly, using the French home care subsidy program ("APA"). We use an original dataset collected from a French District Council with administrative records of APA out-of-pocket payments and home care consumption. Identification primarily relies on inter-individual variations in producer prices. We use the unequal spatial distribution of producers to address the potential price endogeneity arising from non-random selection into a producer. Our results point to a price elasticity around -0.4: a 10% increase in the out-of-pocket price is predicted to lower consumption by 4%, or 37 minutes per month for the median consumer. Copayment rates thus matter for allocative and dynamic efficiencies, while the generosity of home care subsidies also entails redistributive effects.
    Keywords: Long-term Care,Price elasticity,Public policies,Disabled elderly,Censored regression,Dépendance chez la personne âgée,Elasticité-prix,Politiques publiques,Régression censurée
    Date: 2016–08
  20. By: Bénédicte H. Apouey (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Jacques Silber (Bar-Ilan University [Israël])
    Abstract: A country’s performance in health attainment refers to both its achievement (level) and its improvement (evolution) in the health domain. Studies on performance generally measure health attainment using the average health level of the population, and quantify health improvement employing the change in attainment over time. However this approach is flawed because the change in attainment does not satisfy good properties, on the one hand, and because health attainment should not only account for the average health level, but also for disparities in health in the population, on the other hand. We propose a solution to the first limitation by following the lead of Kakwani (1993), who uses achievement and improvement measures which are based on attainment measures and which satisfy important properties. For the second limitation, we extend the work of Kakwani and propose new definitions of attainment that account for the average health level but also for health inequalities in the population. Specifically, we focus on overall and social health inequalities and on the health of the poor. By including these new attainment variables into Kakwani’s indices, we generate new classes of achievement and improvement indices. Using data on 11 low and middle-income Asian countries in the twenty-first century, we highlight that child and maternal health have generally improved in recent decades, due to both an increase in the average health level and a decrease in inequalities.
    Keywords: achievement indices,improvement indices,health inequalities,Asia,child health,maternal health
    Date: 2016–09
  21. By: Pierre Picard (Ecole Polytechnique [Palaiseau])
    Abstract: In the linear coinsurance problem, examined first by Mossin (1968), a higher risk aversion with respect to wealth in the sense of Arrow-Pratt implies a higher optimal coinsurance rate. We show that this property does not hold for health insurance under ex post moral hazard, i.e., when illness severity cannot be observed by insurers and policyholders decide on their health expenditures. The optimal coinsurance rate trades off a risk sharing effect and an incentive effect, both related to risk aversion.
    Keywords: coinsurance, ex post moral hazard,Health Insurance
    Date: 2016–10–10

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