Health insurance: Medical treatment vs disability payment

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Asheim, G.B., A.W. Emblem og T. Nilssen




Research in Economics (Ricerche Economiche)

vol 64(3), 137-145

Sammendrag (engelsk)

We present arguments for treating health insurance and disability insurance in an integrated manner in economic analysis, based on a model where each individual’s utility depends on both consumption and health and her income depends on her earning ability. When purchasing insurance, she may choose a contract that offers less than full medical treatment. We find that high-ability individuals demand full recovery and equalize utility across states, while low-ability individuals demand partial treatment and cash compensation and suffer a loss in utility if ill. Our results carry over to the case where health states are not observable.


Health insurance; Health demand; Disability insurance

Prosjekt info:

Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.:
Frisch prosjekt: 4101 - Økonomi og helse