Prevention in Health Insurance: A Welfare Analysis of Participating Policies

Quaderni - Working Paper DSE No. 765

28 Pages Posted: 27 Jun 2011 Last revised: 29 Jul 2014

See all articles by Francesca Barigozzi

Francesca Barigozzi

University of Bologna - Department of Economics

Renaud Bourlès

University of Angers - Research Group in Quantitative Saving (GREQAM); Ecole Centrale Marseille

Dominique Henriet

Universite Aix Marseille; Ecole Centrale Marseille

Giuseppe Pignataro

University of Bologna - Department of Economics

Date Written: July 2014

Abstract

Preventive care should be subsidized in traditional insurance contracts since policyholders ignore the benefit of their prevention choice on the insurance premium (Ellis and Manning, 2007 JHE). We study participating policies as risk-sharing agreements among policyholders who decide how much to invest in secondary prevention. We explore under which conditions these policies allow partial or even full internalization of prevention benefits in an environment with repeated interactions between policy holders. Welfare generated by the risk-sharing agreement is increasing with the size of the pool, but at the same time the pool size must not be too large for cooperation to sustain the internalization benefits.

Keywords: secondary prevention, positive externality on the insurance premium, long run enrollment, cooperation among policyholders

JEL Classification: D82, I11, I13

Suggested Citation

Barigozzi, Francesca and Bourlès, Renaud and Henriet, Dominique and Pignataro, Giuseppe, Prevention in Health Insurance: A Welfare Analysis of Participating Policies (July 2014). Quaderni - Working Paper DSE No. 765, Available at SSRN: https://ssrn.com/abstract=1873270 or http://dx.doi.org/10.2139/ssrn.1873270

Francesca Barigozzi (Contact Author)

University of Bologna - Department of Economics ( email )

P.zza Scaravilli 2
40126 Bologna, 40126
Italy

Renaud Bourlès

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

Ecole Centrale Marseille ( email )

Technopole de Chateau-Gombert
Marseille, 13013
France

Dominique Henriet

Universite Aix Marseille

Marseille Cedex 07
France
Not available (Phone)
Not available (Fax)

Ecole Centrale Marseille ( email )

Technopole de Chateau-Gombert
Marseille, 13013
France

Giuseppe Pignataro

University of Bologna - Department of Economics ( email )

Piazza Scaravilli, 2
Bologna, BO 40122
Italy

HOME PAGE: http://giuseppepignataro.altervista.org/

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