Basic Versus Supplementary Health Insurance: Moral Hazard and Adverse Selection

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Abstract

This paper introduces a tractable model of health insurance with both moral hazard
and adverse selection. We show that government sponsored universal basic insurance should cover treatments with the biggest adverse selection problems. Treatments not covered by basic insurance can be covered on the private supplementary insurance market. Surprisingly, the cost effectiveness of a treatment does not affect its priority to be covered
by basic insurance.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Number of pages20
Volume2014-034
Publication statusPublished - 2 Sep 2014

Publication series

NameTILEC Discussion Paper
Volume2014-034

Keywords

  • universal basic health insurance
  • voluntary supplementary insurance
  • public vs private insurance
  • adverse selection
  • moral hazard
  • cost effectiveness

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