Health insurance: Medical treatment vs disability payment
We present arguments for treating health insurance and disability insurance in an integrated manner in economic analysis, based on a model where each individual's utility depends on both consumption and health and her income depends on her earning ability. When purchasing insurance, she may choose a contract that offers less than full medical treatment. We find that high-ability individuals demand full recovery and equalize utility across states, while low-ability individuals demand partial treatment and cash compensation and suffer a loss in utility if ill. Our results carry over to the case where health states are not observable.
Year of publication: |
2010
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Authors: | Asheim, Geir B. ; Emblem, Anne Wenche ; Nilssen, Tore |
Published in: |
Research in Economics. - Elsevier, ISSN 1090-9443. - Vol. 64.2010, 3, p. 137-145
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Publisher: |
Elsevier |
Keywords: | Health insurance Health demand Disability insurance |
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