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Health Insurance, Health Savings Accounts and Healthcare Utilization
Author(s) -
Peter Richard,
Soika Sebastian,
Steinorth Petra
Publication year - 2016
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.3142
Subject(s) - deductible , subsidy , health care , savings account , actuarial science , economics , health plan , health insurance , medical expenses , business , public economics , finance , medicine , emergency medicine , market economy , economic growth
Summary Assuming symmetric information, we show that a high‐deductible health plan (HDHP) combined with a tax‐favored health savings account (HSA) induces more savings and less treatment compared with a full coverage plan under reasonable risk preferences. Furthermore, a higher tax subsidy increases savings in any case but decreases medical utilization if and only if treatment expenses are above the deductible. A larger deductible increases savings but does not necessarily decrease healthcare utilization. Whether an HDHP/HSA combination is preferred over a full coverage contract depends on absolute risk aversion. A higher tax advantage increases the attractiveness of an HDHP/HSA combination, whereas the effects of changes in the deductible are ambiguous. The paper shows that a potential regulator needs to carefully set the size of the deductible as only in a certain corridor of the probability of sickness, its effect on aggregate healthcare costs are unambiguously favorable. Copyright © 2015 John Wiley & Sons, Ltd.