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Health Insurance, Health Savings Accounts and Healthcare Utilization

Author

Listed:
  • Richard Peter
  • Sebastian Soika
  • Petra Steinorth
Abstract
Assuming symmetric information, we show that a high‐deductible health plan (HDHP) combined with a tax‐favored health savings account (HSA) induces more savings and less treatment compared with a full coverage plan under reasonable risk preferences. Furthermore, a higher tax subsidy increases savings in any case but decreases medical utilization if and only if treatment expenses are above the deductible. A larger deductible increases savings but does not necessarily decrease healthcare utilization. Whether an HDHP/HSA combination is preferred over a full coverage contract depends on absolute risk aversion. A higher tax advantage increases the attractiveness of an HDHP/HSA combination, whereas the effects of changes in the deductible are ambiguous. The paper shows that a potential regulator needs to carefully set the size of the deductible as only in a certain corridor of the probability of sickness, its effect on aggregate healthcare costs are unambiguously favorable. Copyright © 2015 John Wiley & Sons, Ltd.

Suggested Citation

  • Richard Peter & Sebastian Soika & Petra Steinorth, 2016. "Health Insurance, Health Savings Accounts and Healthcare Utilization," Health Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 357-371, March.
    • Handle: RePEc:wly:hlthec:v:25:y:2016:i:3:p:357-371
    DOI: 10.1002/hec.3142
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    References listed on IDEAS

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    4. Wong, Kit Pong, 2022. "Diversification and risk attitudes toward two risks," Journal of Mathematical Economics, Elsevier, vol. 102(C).

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