Deductibles in health insurance: can the actuarially fair premium reduction exceed the deductible?
The actuarially fair premium reduction in case of a deductible relative to full insurance is affected by: (1) out-of-pocket payments, (2) moral hazard, (3) administrative costs, and, in case of a voluntary deductible, (4) adverse selection. Both the partial effects and the total effect of these factors are analyzed. Moral hazard and adverse selection appear to have a substantial effect on the expected health care costs above a deductible but a small effect on the expected out-of-pocket expenditure. A premium model indicates that for a broad range of deductible amounts the actuarially fair premium reduction exceeds the deductible.
Bakker
F M
FM
Department of Health Policy and Management, Erasmus University, Rotterdam, The Netherlands.
van Vliet
R C
RC
van de Ven
W P
WP
D000206:Actuarial Analysis; D017047:Cost Sharing / Q000706:statistics & numerical data*; D003669:Deductibles and Coinsurance / Q000706:statistics & numerical data*; D005249:Fees and Charges / Q000592:standards / Q000706:statistics & numerical data*; D005102:Health Expenditures / Q000706:statistics & numerical data; D006296:Health Services; D006801:Humans; D015273:Insurance Selection Bias; D007348:Insurance, Health / Q000191:economics* / Q000706:statistics & numerical data; D009042:Motivation; D009426:Netherlands; D011907:Rate Setting and Review / Q000379:methods / Q000592:standards