Accession Number:

ADA257499

Title:

Health Insurance: The Trade-Off Between Risk Pooling and Moral Hazard.

Descriptive Note:

Monograph

Corporate Author:

RAND CORP SANTA MONICA CA

Personal Author(s):

Report Date:

1989-12-01

Pagination or Media Count:

67.0

Abstract:

Choosing economically optimal health insurance coverage involves a trade-off between risk reduction and the overuse of health care. The economic purpose of insurance is to reduce financial uncertainty or risk - the more health insurance lowers the risk, the greater will be the increase in social well-being. But increases in health insurance also increase the amount of medical care demand, because insurance lowers the out-of-pocket cost of health care - the larger the demand response of medical care to cost sharing, the greater the decrease in social well-being, due to the purchase of too much health care. This study examines this trade-off empirically by estimating both the demand for health insurance and the demand for health services. It relies on data from a randomized controlled trial of the cost sharings effects on the use of health services and on the health status for a general, nonelderly under age 65 population.

Subject Categories:

  • Economics and Cost Analysis
  • Medicine and Medical Research

Distribution Statement:

APPROVED FOR PUBLIC RELEASE