Incentivizing efficient utilization without reducing access: The case against cost- sharing in insurance
نویسنده
چکیده
Cost-sharing is regarded as an important tool to reduce moral hazard in health insurance. Contrary to standard prediction, however, such requirements are found to decrease utilization both of e cient and of ine cient care. I employ a simple model that incorporates two possible explanations consumer mistakes and limited access to assess the welfare implications of di erent insurance designs. I nd cost-sharing never to be an optimal solution as it produces two novel ine ciencies by limiting access. An alternative design, relying on bonuses, has no such side e ects and achieves the same incentivization. JEL Classi cation: D82, I13, I14
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