Reducing Medical Spending of the Publicly Insured: The Case for a Cash-out Option
American Economic Journal: Economic Policy
vol. 11,
no. 3, August 2019
(pp. 390-426)
Abstract
Individuals' medical spending has both necessary and discretionary components, which are not, however, separately observable. This paper studies ways to improve upon existing public health insurance policies by using a framework where both the discretionary and necessary components of medical spending are explicitly modeled. First, using a simple theoretical framework, the paper shows that the key to reducing discretionary medical spending is to introduce a trade-off between nonmedical and medical consumption. Next, using a rich quantitative life-cycle model, the paper shows that this trade-off can be successfully implemented by introducing an option to substitute public health insurance with cash transfers.Citation
Pashchenko, Svetlana, and Ponpoje Porapakkarm. 2019. "Reducing Medical Spending of the Publicly Insured: The Case for a Cash-out Option." American Economic Journal: Economic Policy, 11 (3): 390-426. DOI: 10.1257/pol.20160433Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- G22 Insurance; Insurance Companies; Actuarial Studies
- H51 National Government Expenditures and Health
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
There are no comments for this article.
Login to Comment