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Supplementary Insurance with Ex-Post Moral Hazard: Efficiency and Redistribution

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  • F. Barigozzi
Abstract
This paper investigates the topping-up scheme in health insurance when both public and private firms use linear contracts. First, the case with identical consumers is analyzed. The optimal public coverage is derived both when the firms play simultaneously and when they play sequentially. In the former case consumers are over-insured, whereas, in the latter case, the second-best allocation is obtained. Then, consumers heterogeneity is introduced: consumers differ in their wage rate and labour supply is endogenous. It is assumed that public coverage is uniform and health expenditures are financed by linear taxation. Results show that, in the sequential game, the optimal public coverage is negative and consumers are under-insured.

Suggested Citation

  • F. Barigozzi, 2004. "Supplementary Insurance with Ex-Post Moral Hazard: Efficiency and Redistribution," Working Papers 521, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:521
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    1. Robin Boadway & Manuel Leite‐Monteiro & Maurice Marchand & Pierre Pestieau, 2006. "Social Insurance and Redistribution with Moral Hazard and Adverse Selection," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 279-298, July.
    2. Francesca Barigozzi, 2004. "Reimbursing Preventive Care," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 29(2), pages 165-186, December.
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    9. BOADWAY, Robin & LEITE-MONTEIRO, Manuel & MARCHAND, Maurice & PESTIEAU, Pierre, 2001. "Social insurance and redistribution," LIDAM Discussion Papers CORE 2001041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & De Graeve, Diana & Duchesne, Inge & Gerdtham, Ulf-G & Gerfin, Michael & Geurts, Jose & Gross, Lorna, 2000. "Equity in the delivery of health care in Europe and the US," Journal of Health Economics, Elsevier, vol. 19(5), pages 553-583, September.
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    Cited by:

    1. Raj Chetty & Emmanuel Saez, 2010. "Optimal Taxation and Social Insurance with Endogenous Private Insurance," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 85-114, National Bureau of Economic Research, Inc.
    2. Rosalind Bell-Aldeghi, 2019. "Interactions between Social and Topping Up Insurance under ex-post Moral Hazard," Working Papers 2019-01, CRESE.
    3. Bell-Aldeghi, Rosalind, 2019. "Interactions between Social and Topping Up Insurance under ex-post Moral Hazard," MPRA Paper 92417, University Library of Munich, Germany.

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