Minimum generosity levels in a competitive health insurance market

Minke Remmerswaal*, Jan Boone, Rudy Douven

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

25 Downloads (Pure)


An important condition for optimal health insurance is that the level of health care coverage is inversely related to the elasticity of demand. We show that this condition is not satisfied for voluntary deductibles in the Netherlands, which are optional deductibles on top of the mandatory deductible introduced by the Dutch government. We find that low-risk types, that mainly choose voluntary deductibles, have a lower elasticity of demand than high-risk types. Moreover, we show that voluntary deductibles introduce equity problems as it results in non-trivial cross subsidies from high-risk to low-risk types. Capping the level of voluntary deductibles (imposing minimum generosity) is likely to be welfare enhancing in the Netherlands.
Original languageEnglish
Article number102782
Number of pages19
JournalJournal of Health Economics
Publication statusPublished - 29 Jun 2023

Bibliographical note

Funding Information:
We gratefully acknowledge comments and suggestions by two referees of this journal, Judith de Jong, Tobias Klein, Owen O’Donnell, Mieke Reuser, Wynand van de Ven, seminar participants at AHES in Melbourne, 2019, ASHEcon in Washington DC, 2019, RAN conference in Den Haag, 2017, iHEA in Boston, 2017, euHEA in Maastricht, 2018, lolaHESG in Hoenderloo, 2018, and colleagues at CPB Netherlands Bureau for Economic Policy Analysis. Jan Boone thanks NWO for financial support through a Vici grant. An earlier version of this paper circulated under the title “Selection and Moral Hazard Effects of a Voluntary Deductible in a Competitive Health Insurance Market”. Minke Remmerswaal worked at the CPB Netherlands Bureau for Economic Policy Analysis while undertaking this research.

Publisher Copyright:
© 2023 The Authors


Dive into the research topics of 'Minimum generosity levels in a competitive health insurance market'. Together they form a unique fingerprint.

Cite this