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DOI: 10.5445/IR/1000075513

Incentivizing efficient utilization without reducing access: The case against costsharing in

Fels, Markus

Cost-sharing is regarded as an important tool to reduce moral hazard in health insurance. Contrary to standard prediction, however, such requirements are found to decrease utilization both of efficient and of inefficient care. I employ a simple model that incorporates two possible explanations - consumer mistakes and limited access - to assess the welfare implications of different insurance designs. I find cost-sharing never to be an optimal solution as it produces two novel inefficiencies by limiting access. An alternative design, relying on bonuses, has no such side effects and achieves the same incentivization.

Zugehörige Institution(en) am KIT Institut für Volkswirtschaftslehre (ECON)
Publikationstyp Forschungsbericht
Jahr 2017
Sprache Englisch
Identifikator ISSN: 2190-9806
URN: urn:nbn:de:swb:90-755130
KITopen ID: 1000075513
Verlag KIT, Karlsruhe
Umfang 19 S.
Serie Working paper series in economics ; 105
Schlagworte Moral Hazard, Limited Access, Cost-Sharing, Insurance Rebates
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