How profitable is a voluntary deductible in health insurance for the consumer?

K.P.M. van Winssen, R.C. van Kleef and W.P.M.M. van de Ven

Health Policy, 2015, vol. 119, issue 5, 688-695

Abstract: To counteract moral hazard in health insurance, insured can be offered a voluntary deductible (VD) in return for a premium rebate. In the Dutch mandatory basic health insurance however, only 11 per cent of the insured opted for a VD in 2014. Several determinants could affect the decision to opt for a VD. This paper examines one of these determinants: the financial profitability. A VD is profitable for the consumer if the out-of-pocket expenses do not exceed the offered premium rebate. The empirical analyses, based upon individual-level data on costs and characteristics of over 800,000 Dutch insured, show that a VD of €500 on top of the mandatory deductible of €360 would have been financially profitable for 48 per cent of the Dutch insured given the average premium rebate of € 240 in 2014. If the whole population had a VD, most insured would obtain either the maximum loss (44 per cent) or the maximum gain (41 per cent). A VD is profitable for males, young insured, healthy insured and insured with few healthcare expenses in the past. To further reduce moral hazard, the following strategies can be used to increase the number of insured opting for a VD: provide insured with information regarding the VD and introduce a shifted deductible.

Keywords: Voluntary deductibles; Moral hazard; Health insurance; Financial profitability (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0168851015000548
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:hepoli:v:119:y:2015:i:5:p:688-695

DOI: 10.1016/j.healthpol.2015.02.009

Access Statistics for this article

Health Policy is currently edited by Katrien Kesteloot, Mia Defever and Irina Cleemput

More articles in Health Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu () and ().