Code for: Time Aggregation in Health Insurance Deductibles

Principal Investigator(s):  View help for Principal Investigator(s) Long Hong, University of Wisconsin - Madison; Corina Mommaerts, University of Wisconsin - Madison and NBER

Version:  View help for Version V1

Name File Type Size Last Modified
AppendixFigure1.pdf application/pdf 15.1 KB 03/22/2023 08:50:AM
AppendixFigure2.pdf application/pdf 18.8 KB 03/22/2023 08:50:AM
AppendixFigure3A.pdf application/pdf 16.1 KB 03/22/2023 08:50:AM
AppendixFigure3B.pdf application/pdf 16.7 KB 03/22/2023 08:50:AM
AppendixFigure6A.pdf application/pdf 16.4 KB 03/22/2023 08:50:AM
AppendixFigure6B.pdf application/pdf 16.7 KB 03/22/2023 08:50:AM
AppendixFigure7A.pdf application/pdf 16.4 KB 03/22/2023 08:50:AM
AppendixFigure7B.pdf application/pdf 16.7 KB 03/22/2023 08:50:AM
AppendixFigure8A.pdf application/pdf 16.7 KB 03/22/2023 08:50:AM
AppendixFigure8B.pdf application/pdf 16.8 KB 03/22/2023 08:50:AM

Project Description

Summary:  View help for Summary Health insurance plans increasingly pay for expenses only beyond a large annual deductible. This paper explores the implications of deductibles that reset over shorter timespans. We develop a model of insurance demand between two actuarially equivalent deductible policies, in which one deductible is larger and resets annually and the other deductible is smaller and resets biannually. Our model incorporates borrowing constraints, moral hazard, mid-year contract switching, and delayable care. Calibrations using claims data show that the liquidity benefits of resetting deductibles can generate welfare gains of 3-10% of premium costs, particularly for individuals with borrowing constraints.

Scope of Project

Subject Terms:  View help for Subject Terms health insurance; deductible; liquidity
JEL Classification:  View help for JEL Classification
      D15 Intertemporal Household Choice; Life Cycle Models and Saving
      G52 Household Finance: Insurance
      I13 Health Insurance, Public and Private
Geographic Coverage:  View help for Geographic Coverage United States of America
Universe:  View help for Universe
Individuals and families with employer-sponsored health insurance coverage in large commercial plans from approximately 350 insurers nationwide.
Data Type(s):  View help for Data Type(s) administrative records data

Methodology

Data Source:  View help for Data Source Truven Marketscan, 2013
Unit(s) of Observation:  View help for Unit(s) of Observation Individual claims
Geographic Unit:  View help for Geographic Unit National

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Published Versions

V1 [2024-03-29]

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