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Co-insurance rate

We define the co-insurance rate or co-payment rate as the (fixed) percentage of the sum that insurees are required to pay out of their own pocket at the moment of purchase. For example, in Spain it is 40 per cent for the employed and for the great majority of listed pharmaceuticals. Some authors use the term co-payment to mean the fixed sum per package that is paid by the user, independently of the price. [Pg.125]

Voluntary insurance would be the market solution to uncertainty for risk-averse individuals. In this context, the user chooses the optimum co-insurance rate. Theory offers some analytical results on optimal health insurance contract designs.1 The consumer decides the extent of the coverage and the optimum co-insurance rate, and ultimately the price to be paid for the premium. In competitive markets, with actuarially fair premiums, the optimum co-insurance rate varies between individuals and depends on the risk of falling sick and the price elasticity of demand. [Pg.126]

In the 1970s and 1980s in the USA, the need for health cost containment and the alarming empirical estimates on the extent of moral hazard advised an increase in the co-payment rate for health services. Thus, Feldstein5 estimated that if the co-insurance rate were raised from 33 per cent to 67 per cent, the costs incurred due to welfare loss would fall much more than the benefits derived from reducing the risk. Subsequently, Feldman and Dowd,6 using data from the Rand experiment in the 1980s, reached similar conclusions. [Pg.131]


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