Discussion paper

DP10199 Basic versus supplementary health insurance: moral hazard and adverse selection

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.

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Citation

Boone, J (2014), ‘DP10199 Basic versus supplementary health insurance: moral hazard and adverse selection‘, CEPR Discussion Paper No. 10199. CEPR Press, Paris & London. https://cepr.org/publications/dp10199