German Long-Term Health Insurance: Theory Meets Evidence

Juan Pablo Atal, Hanming Fang, Martin Karlsson and Nicolas Ziebarth ()

No 26870, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: German long-term health insurance (GLTHI) represents the largest market for private long-term health insurance contracts in the world. We show that GLTHI’s contract design coincides with the optimal dynamic contract for individuals with constant lifetime income profiles. After estimating the key ingredients of a life-cycle model, we find that, under a variety of assumptions, GLTHI achieves welfare that is at most 4% lower than for the optimal contract. Relative to the gains of replacing short-term contracts with either long-term contract, this welfare gap is smallest when reclassification risk is high.

JEL-codes: G22 I11 I18 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-cta, nep-hea and nep-ias
Note: EH IO PE
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Citations: View citations in EconPapers (2)

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Journal Article: German Long-Term Health Insurance: Theory Meets Evidence (2025)
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