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Potential determinants of deductible uptake in health insurance: How to increase uptake in The Netherlands?

By K.P.M. van Winssen, R.C. (Richard) van Kleef and W.P.M.M. (Wynand) van de Ven

Abstract

In health insurance, voluntary deductibles are offered to the insured in return for a premium rebate. Previous research has shown that 11 % of the Dutch insured opted for a voluntary deductible (VD) in health insurance in 2014, while the highest VD level was financially profitable for almost 50 % of the population in retrospect. To explain this discrepancy, this paper identifies and discusses six potential determinants of the decision to opt for a VD from the behavioral economic literature: loss aversion, risk attitude, ambiguity aversion, debt aversion, omission bias, and liquidity constraints. Based on these determinants, five potential strategies are proposed to increase the number of insured opting for a VD. Presenting the VD as the default option and providing transparent information regarding the VD are the two most promising strategies. If, as a result of these strategies, more insured would opt for a VD, moral hazard would be reduced

Topics: Behavioral economics, Health insurance, Moral hazard, Nudge theory, Prospect theory, Voluntary deductibles
Year: 2015
DOI identifier: 10.1007/s10198-015-0745-2
OAI identifier: oai:repub.eur.nl:81529
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