Falling ill raises the health insurer's administration bill

Rudy Douven and Lukas Kauer

Social Science & Medicine, 2023, vol. 324, issue C

Abstract: In many countries, governments use payment systems to compensate health insurers more for enrollees with higher expected costs. However, little empirical research has examined whether these payment systems should also include health insurers' administrative costs. We provide two sources of evidence that health insurers with a more morbid population have higher administrative costs. First, we show at the customer level a causal relationship between individual morbidity and individual administrative contacts with the insurer, using the weekly evolution of the number of individual customer contacts (calls, emails, in-person visits etc.) of a large Swiss health insurer. Using a difference-in-differences design, we find that the onset of a chronic illness causes on average a persistent increase of about 40% in individuals’ contacts with the health insurer. Second, we provide evidence that this relationship also holds for total administrative costs at the insurer level. We study twenty years of Swiss health insurance market data and find a positive elasticity of around 1, indicating that, all else equal, an insurer with a more morbid population, equal to 1% more health care spending, faces about 1% higher administrative costs.

Keywords: Administrative costs; Health insurance; Individual administrative contacts; Chronically ill; Health expenditures; Switzerland (search for similar items in EconPapers)
JEL-codes: H75 I13 L23 M11 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0277953623002137
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:socmed:v:324:y:2023:i:c:s0277953623002137

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
http://www.elsevier. ... _01_ooc_1&version=01

DOI: 10.1016/j.socscimed.2023.115856

Access Statistics for this article

Social Science & Medicine is currently edited by Ichiro (I.) Kawachi and S.V. (S.V.) Subramanian

More articles in Social Science & Medicine from Elsevier
Bibliographic data for series maintained by Catherine Liu ().