Correction note on "The demand for health with uncertainty and insurance"

This paper proves the non-existence of an optimal solution under the Liljas [Liljas, B. (1998). The demand for health with uncertainty and insurance. J. Health Econ., 17, 153-170] type of insurance. The reason for the non-existence is that the insurance induces the individual to increase his time input, relative to medical expenditure in the household production of health investment. Hence, it distorts the balance of inputs in the production of health investment. Moreover, it also distorts the household production for consumption goods through time constraints. Therefore, this paper proposes an alternative insurance that covers the time loss due to illness and has an optimal solution.