Lecture 7: Health Insurance Flashcards
Insurance
Brought through private markets to protect against uncertainty.
Social Insurance
Government are the insurers and are financed through premiums and participation.
Premium
Paying for certain amount of coverage.
Deductible
Individuals have to pay a certain amount for insurance to kick in. Usually set by ins. companies.
Exclusions
When some services are not covered by the insurance.
Coinsurance & Copayment
Individual pays a loss or liability that occurs when an event takes place.
Risk Aversion Utility ___ but @ a ____ rate
Risk Aversion Utility increases but @ a decreasing rate.
Risk Aversion: U1 __ 0 and U2 ___ 0
U1 > 0 and U2 < 0 (Happens two ways)
Risk Aversion Individuals
Individuals who want to protect themselves and will most likely buy insurance.
Risk Loving Individuals
Individuals who are not interested in buying insurance.
Risk Loving Utility ___ @ a ___ rate.
Utility increasing @ a increasing rate
Risk Loving U1 ___ 0 (___ @ a ___ rate) and U2 ___ 0.
U1 > 0 (increasing @ a decreasing rate) and U2 > 0
Risk Neutral Individuals
They are indifferent in either buying or not buying insurance.
Risk neutral has a ___ line.
Risk neutral has a constant line.
Risk neutral: U1 __ 0 or U2 ___ 0.
U1 >0 or U2 = 0.
