The Demand for Supplementary Health Insurance, Or Do Deductibles Matter?

by Emmett B. Keeler, D. T. Morrow, Joseph P. Newhouse

Download

Download eBook for Free

FormatFile SizeNotes
PDF file 1.5 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Purchase

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback38 pages $20.00 $16.00 20% Web Discount

Will consumers purchase private insurance policies to supplement a deductible that might be part of a national health insurance plan? "If such supplementation does occur," say the authors, "demand for ambulatory health services may stress existing supply, leading to extensive nonprice rationing of services." Based on an economic model of the decision to purchase supplementary insurance, study results show that if the current tax subsidy of health insurance is ended, administrative costs and hence policy premiums covering all medical expenses that supplement a moderate (up to $200 per person) deductible will be so high that almost no one will buy them. Even if the subsidy is continued, there probably will not be much demand. Supplementary insurance covering only hospital expenditures is more attractive because administrative costs are much lower. Only about one in ten persons eligible for Medicare has chosen to supplement the $60 deductible for physician services, whereas more than half have purchased hospital supplementary policies.

This report is part of the RAND Corporation report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.