Risk Selection under Public Health Insurance with Opt-out

Sebastian Panthöfer

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper studies risk selection between public and private health insurance when some individuals can purchase private insurance by opting out of otherwise mandatory public insurance. Using a theoretical model, I show that public insurance is adversely selected when insurers and insureds are symmetrically informed about health-related risks, and that selection can be of any type (advantageous or adverse) when insureds have private information about health risks. Drawing on data from the German Socio-Economic Panel, I find that: (1) public insurance is adversely selected under the German public health insurance with opt-out scheme, (2) individuals adversely select public insurance based on self-assessed health and advantageously select public insurance based on risk aversion, and (3) there is evidence of asymmetric information.

JEL-codes: D82 H51 I13 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-hea and nep-ias
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https://www.econstor.eu/bitstream/10419/113085/1/VfS_2015_pid_152.pdf (application/pdf)

Related works:
Journal Article: Risk Selection under Public Health Insurance with Opt‐Out (2016)
Working Paper: Risk Selection under Public Health Insurance with Opt-out (2015)
Working Paper: Risk selection under public health insurance with opt-out (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:113085

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