title: Optimal non-linear health insurance.
abstract: Most theoretical and empirical work on efficient health insurance has been based on models with linear insurance schedules (a constant co-insurance parameter). In this paper, dynamic optimization techniques are used to analyse the properties of optimal non-linear insurance schedules in a model similar to one originally considered by Spence and Zeckhauser (American Economic Review, 1971, 61, 380-387) and reminiscent of those that have been used in the literature on optimal income taxation. The results of a preliminary numerical example suggest that the welfare losses from the implicit subsidy to employer-financed health insurance under US tax law may be a good deal smaller than previously estimated using linear models.
authors.affiliation: Department of Economics, University of Western Ontario, London, Canada. blomqvist@sscl.uwo.ca
authors.forename: A
authors.initials: A
authors.lastname: Blomqvist
mesh_terms: D002170:Canada; D003256:Community Participation / Q000191:economics / Q000706:statistics & numerical data*; D003365:Costs and Cost Analysis; D003669:Deductibles and Coinsurance; D005249:Fees and Charges; D006302:Health Services Research; D006304:Health Status; D015273:Insurance Selection Bias; D007348:Insurance, Health / Q000191:economics*; D018803:Models, Economic; D012306:Risk