How high should your deductible be?
This is an exercise on choosing your health insurance deductible. You answer a few questions about risk and your expected healthcare costs, see which deductible a simple model would pick, and compare it with what you would choose yourself.
The exercise is also an opportunity to reconsider your choice for next year. If you want to lower your deductible, your insurer must receive your notice by 30 November; raising it has a later deadline. Complete your comparison ahead of time, so we can discuss your reasoning in the tutorial on 30 November. See the official notice rules for details.
If you are not in Swiss basic insurance, for example because you are an EU/EFTA/UK student covered at home or have an approved exemption, do the exercise as if you had a Swiss policy, using the example premiums. See the official rules for foreign students.
Your deductible
Optional. Your answers are saved in this browser only.
Risk questions
Imagine you have to choose between two new jobs. You are the only earner in your household, and the income lasts for the rest of your life. Job A pays a fixed income. Job B has a 50% chance of doubling that income and a 50% chance of cutting it. If you are not earning yet, think of a typical first salary.
Questions from the US Health and Retirement Study (Barsky et al., 1997).
Your risk aversion
Utility: u(w) = w1−γ / (1−γ). With γ = 0.5 this is 2√w, which ranks every choice the same way as √w.
Savings and income you could use to pay premiums and medical bills. The default is CHF 10,000; you can change it.
Your healthcare costs next year
How likely is each amount? Think of the full bill for care covered by basic insurance, before your insurer pays anything, and leave out premiums. The five chances must add up to 100%.
Premiums
Use the example premiums, or enter next year's monthly premiums from your insurer's letter or the official premium calculator. Use the same insurer, insurance model and accident cover for all six deductibles.
Result
Before you see the result
What would you pay out of pocket? First the deductible, then 10% of the rest, with the 10% part capped at CHF 700 a year.
The model recommends
Lowest average cost
What does each deductible cost?
The numbers
| Deductible | Premium | Average out-of-pocket | Average total | CE cost | Maximum out-of-pocket |
|---|
CE cost (certainty-equivalent cost): the fixed yearly amount you would find just as good as the uncertain cost of an option. It adds a charge for risk to the average cost. Risk premium: CE cost minus average total.
Why only CHF 300 or CHF 2,500 without risk aversion? With the largest legal discount, each extra franc of deductible saves CHF 0.70 of premium and adds at most one franc of expected out-of-pocket cost, less the higher the deductible. So for a risk-neutral person (γ = 0) the cheapest option is always CHF 300 or CHF 2,500.
What would change the result?
Change one input at a time and watch the recommendation.
See the result first.
Recommendation map
Each colour is the recommended deductible for a combination of γ and the chance of high costs. The cross marks your current inputs; the dashed box is the γ range from your answers.
Your decision
Download your report with your calculations and reflections, and upload it to Canvas.