The political economics of social health insurance: the tricky case of individuals’ preferences

Christian Pfarr and Andreas Schmid ()

MPRA Paper from University Library of Munich, Germany

Abstract: Social health insurance systems can be designed with different levels of state involvement and varying degrees of redistribution. In this article we focus on citizens’ preferences regarding the design of their health insurance coverage including the extent of redistribution. Using a microeconomic model we hypothesize that the individual’s preferred options are determined by the relative income position and the relative risk of falling ill. Only individuals who expect to realize a net profit through the implicit redistributive transfers will favour a public insurance coverage over a private one. We test this hypothesis empirically using three dis-tinct approaches. The first two are based on survey questions focusing on the type of coverage and the degree of redistribution respectively. The third is based on a discrete choice experiment thus accounting for trade-offs and budget constraints. The data is from a representative sample of 1.538 German individuals who were surveyed and participated in the DCE in early 2012. We find that the model has to be rejected. There is a wide consensus that redistributive elements should be an integral part of the social health insurance system and could even be extended. However, there are also preferences for health insurance coverage that can be individually optimized.

Keywords: social health insurance; preferences; discrete choice experiment (search for similar items in EconPapers)
JEL-codes: C93 H23 H51 I13 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-dcm, nep-hea, nep-ias and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:44534

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