Voluntary Deductibles and Risk Equalization: A complex interaction

Governments around the world use health insurance as an instrument to establish universal access to medical care. In some countries, e.g. Germany, the Netherlands and Switzerland, there is a trend towards managed competition among insurers and providers of care and towards higher levels of consumer cost sharing. A popular form of cost sharing is the voluntary deductible, i.e. the option for consumers to pay medical expenditures up to a certain amount themselves in return for a rebate on their out-of-pocket premium. Voluntary deductibles increase consumer choice and can reduce medical consumption. This study focuses on some crucial policy choices concerning the premium rebate for a voluntary deductible in the particular context of a competitive, social health insurance market. Here, competitive means that consumers can periodically switch among insurance plans offered by risk-bearing insurers and social means that a sponsor (e.g. government) aims at realizing risk- and income solidarity. Regarding the social aspects, this thesis will only focus on risk solidarity, i.e. the cross-subsidies from low-risk (e.g. the young and healthy) to high-risk consumers (e.g. the old and unhealthy) intended to make insurance plans affordable for the latter. For curative care, social health insurance schemes with competitive elements can be found, for instance, in Belgium, Germany, Ireland, the Netherlands, Switzerland, and the United States. In a competitive market, insurers are forced to adjust the premium rebate to the difference in (expected) expenses between consumers who choose a deductible and those who do not. From a social perspective, this market-based rebate might be unacceptable. The goal of this study is to reveal some crucial policy choices and trade-offs concerning the market-based rebate and to examine the associated research questions. Although this study particularly focuses on the Dutch, German and Swiss context, the conclusions will be important for other countries as well.

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