Optimal deductibles for outpatient services.

This paper analyses the effect of absolute deductibles on the cost of insurance for outpatient services. Moreover, cost savings on retained losses are estimated. Sharing risks between the insured and the insurer reduces total expenditure for outpatient benefits by up to 35%. In particular, optimal deductibles are determined in their utilitarian sense: the maximum possible savings on medical expenses are computed from the ground up. As part of the study, the effect of age and gender on these savings is analysed. The analysis is based on data taken from the private medical insurance industry in Germany. Similarities and discrepancies with respect to results obtained in the RAND Health Insurance Experiment conducted in the United States from 1971 to 1982 are highlighted.