This paper proposes that an employer's choice of self-insurance vs. purchased health insurance can be explained by a trade-off between administrator moral hazard, the incentive for third-party administrators to be inefficient managers of self-insured employers medical claims and employer moral hazard, the insured employer's failure to invest in reducing health risks among its workers. These explanations have not been analysed in the literature but they are broadly consistent with data and they can explain the increasing popularity of self-insurance over the past 10 years.
|Original language||English (US)|
|Number of pages||16|
|Journal||Geneva Papers on Risk and Insurance: Issues and Practice|
|State||Published - Oct 2012|
- Aanalysis of health-care markets
- Asymmetric and private information
- Insurance companies