Costs of dying: alternatives to rationing.
In western industrialised countries, about 30% of health-care expenditure of retired people is incurred by individuals in their last year of life. The corresponding high costs of dying have led medical philosophers to ask for a rationing of health-care services according to age. By contrast, this paper pursues an individualistic approach. High costs of dying are identified as a consequence of moral hazard on both the demand and supply side of the health-care sector. Health insurance prevents demand for health-care services from decreasing when an individual's residual life expectancy shrinks. Age-related moral hazard can be limited by a coinsurance scheme with a deductible that increases with the age of the insured. Given the high costs of dying, the optimal insurance policy links the coinsurance rate to the age-specific mortality risk.
Felder
S
S
Institute for Empirical Research in Economics, University of Zurich, Switzerland.
D000206:Actuarial Analysis; D000367:Age Factors; D000368:Aged; D017047:Cost Sharing; D003669:Deductibles and Coinsurance; D019049:Developed Countries / Q000191:economics; D017048:Health Care Costs; D015276:Health Care Rationing / Q000191:economics*; D006301:Health Services Needs and Demand / Q000191:economics; D006801:Humans; D008017:Life Expectancy; D008020:Life Support Care / Q000191:economics; D040841:Resource Allocation; D012308:Risk Management / Q000379:methods; D013727:Terminal Care / Q000191:economics* / Q000706:statistics & numerical data; D026712:Value of Life