Price Elasticities and Social Health Insurance Choice in Germany: A Dynamic Panel Data Approach

Marcus Tamm (), Harald Tauchmann (), Stefan Greß and Jürgen Wasem

No 28, RWI Discussion Papers from Rheinisch-Westfälisches Institut für Wirtschaftsforschung

Abstract: In 1996 free choice of health insurers has been introduced in the German social health insurance scheme. Competition between insurers was supposed to increase efficiency. A crucial precondition for effective competition among health insurers is that consumers search for lower-priced health insurers.We test this hypothesis by estimating the price elasticities of insurers’ market shares. We use unique panel data and specify a dynamic panel model to explain changes in market shares. Estimation results suggest that short-run price elasticities are smaller than previously found by other studies. In the long-run, however, estimation results suggest substantial price effects.

Keywords: Competition; generalized method of moments; health insurance (search for similar items in EconPapers)
JEL-codes: I18 C33 (search for similar items in EconPapers)
Date: 2005-06
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