Health Insurance Competition in Germany - The Role of Advertising

Bettina Becker () and Silke Uebelmesser

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: In the 1990s, competition among health insurance funds (‘sickness funds’) was introduced in Germany. As one means of competition, free choice of initial health funds and subsequent switching between them was made available to all insured. Since then, the number of funds has decreased substantially, and funds have had to engage in competitive strategies to remain in the market. In this paper, we want to analyse the funds’ advertising activities in the face of the changed competitive environment. This has not been possible to date due to a lack of data. We use two new datasets to get a first insight into the potential effects of competition on funds’ advertising strategies; one of the volume and cost of advertisements and one of their contents. Our results suggest that competition has been associated with an increase in the amount of advertising. As to the adverts themselves, we find that there was a decrease in the share of advertisements of a ‘general’ content in favour of advertisements of a more ‘fund-specific’ content. The data therefore indicate that once the market was open to switching of funds by the insured, funds’ advertising efforts changed to differentiating their own perceived strengths from those of competitor funds. These observations allow us to draw some tentative conclusions about the relevance of (attempts of) risk selection by health funds via advertisements and about the general success of the pro-competitive legislation.

Keywords: Regulated competition; health insurance market; risk selection; advertising; Germany (search for similar items in EconPapers)
JEL-codes: G22 I11 I18 M37 (search for similar items in EconPapers)
Date: 2010-03, Revised 2010-03
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Health Insurance Competition in Germany - the Role of Advertising (2010)
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