Risk Selection in Health Insurance Markets

Peter Zweifel (), Friedrich Breyer and Mathias Kifmann ()
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Peter Zweifel: University of Zurich
Mathias Kifmann: University of Augsburg

Chapter 7 in Health Economics, 2009, pp 253-291 from Springer

Abstract: Abstract In the 1990s, several countries exposed their social health insurers to an increased degree of competition in the hope of improving efficiency in health insurance and in their health care sectors. However, as shown in Section 5.4, competitive health insurers tend to charge a high premium to high risks and a low premium to low risks. This is nothing but a generalized version of the ‘price equal to marginal cost’ rule; after all, high risks are characterized by comparatively high expected cost of treatment due to a high probability of being sick. Moreover, for reasons spelled out in Chapter 5, the government wants all citizens to have health insurance.

Keywords: Health Care Expenditure; Risk Adjustment; Health Insurer; Risk Sharing; Indifference Curve (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-3-540-68540-1_7

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