Risk Selection under Public Health Insurance with Opt-out
Sebastian Panthöfer ()
UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
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.
Keywords: Public; and; private; health; insurance; Risk; selection; Asymmetric; information (search for similar items in EconPapers)
JEL-codes: D82 H51 I13 I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-hea, nep-ias and nep-mfd
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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:cte:werepe:we1504
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