Véra Zabrodina awarded with the Young Swiss Economist prize at this year’s Swiss Society of Economics and Statistics for her paper «Timing Moral Hazard under Deductibles in Health Insurance»

Véra Zabrodina

The Faculty of Business and Economics congratulates!

Timing Moral Hazard under Deductibles in Health Insurance

This paper develops a new approach to identifying timing moral hazard in health insurance contracts when deductible choice is endogenous. I set up a dynamic model of healthcare consumption where individuals exceed a high deductible after a large health shock. I show that individuals either strategically prepone care from the year after the shock and keep a high deductible, or do not retime and switch to a low deductible the year after. The identification of timing moral hazard exploits the randomness of shock timing within a calendar year. Empirical results show quanti- tatively large timing moral hazard responses, which decrease with the time left to the deductible reset. The insured do re-optimize on-the-go to minimize out-of-pocket costs, but face substantial frictions in retiming, which differ across types of care. These patterns bear implications for cost sharing and insurance policy.

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