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A note on health insurance under ex post moral hazard

Pierre Picard 1, *
* Corresponding author
Abstract : In the linear coinsurance problem, examined Örst by Mossin (1968), a higher risk aversion with respect to wealth in the sense of ArrowPratt implies a higher optimal coinsurance rate. We show that this property does not hold for health insurance under ex post moral hazard, i.e., when illness severity cannot be observed by insurers and policyholders decide on their health expenditures. The optimal coinsurance rate trades o§ a risk sharing e§ect and an incentive e§ect, both related to risk aversion.
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Submitted on : Tuesday, August 23, 2016 - 10:02:45 AM
Last modification on : Thursday, March 5, 2020 - 6:28:49 PM
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Pierre Picard. A note on health insurance under ex post moral hazard. 2016. ⟨hal-01353597v2⟩

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