Considerable attention in the U.S. has been focused on the development of high deductible insurance plans, largely with the expectation that consumers facing the full price of medical care will make more efficient consumption choices. While moving to higher deductibles should reduce spending...

"Prices in government and employer-sponsored health insurance markets only partially reflect insurers' expected costs of coverage for different enrollees. This can create inefficient distortions when consumers self-select into plans. We develop a simple model to study this problem and estimate...