The Economics of Incentive-Based Health Care Plans

Dennis Heffley () and Thomas Miceli

No 1997-05, Working papers from University of Connecticut, Department of Economics

Abstract: Medical savings accounts (MSAs) belong to a larger class of incentive-based health care plans. Using a model that allows the consumer to invest in healthy activities, we examine the efficiency properties of incentive plans and compare them to traditional full- coverage and deductible plans, under both experience rating and community rating. The model also is extended to include utilization of preventive health care. Properly constructed incentive plans have the capacity to induce socially efficient levels of healthy activities and preventive care, raising the expected wealth of consumers without reducing insurers' profits.

Pages: 23 pages
Date: 1997-07
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:1997-05

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