The Choice Among Medical Insurance Plans.

Yoav Benjamini, Yael Benjamini

Research output: Contribution to journalArticlepeer-review


The article analyzes the choice between the two types of insurance. An interpretation of economist Richard Zeckhauser implies that for a homogeneous group, an optimal Health Maintenance Organizations (HMO) plan is superior to the optimal conventional one. It is shown here that the opposite may be true for a non-homogeneous group, depending on how heterogeneous the group is. Although for members of a homogeneous group a HMO plan is welfare superior, members of a heterogeneous group may be better off with a conventional insurance (CI) scheme. This discrepancy between the results for homogeneous and heterogeneous groups has theoretical importance. Authors of the article suggest that where people can choose between the two types of plans, the group that is formed in a specific HMO plan is more homogeneous than its counterpart in a CI scheme. They conclude by discussing the practical consequences of these findings for the design of medical insurance plans. It is seen that it is still possi
Original languageUndefined/Unknown
Pages (from-to)221-227
Number of pages7
JournalAmerican Economic Review
Issue number1
StatePublished - 1986


  • Health insurance
  • Consumer preferences
  • Economists
  • Health maintenance organizations
  • Organizational structure
  • Health insurance -- United States
  • Health planning
  • Public health
  • United States
  • Zeckhauser
  • Richard

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