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Exit, Voice or Loyalty? An Investigation into Mandated Portability of Front-Loaded Private Health Plans

Juan Pablo Atal (), Hanming Fang (), Martin Karlsson and Nicolas Ziebarth ()
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Juan Pablo Atal: University of Pennsylvania

No 10871, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: We study theoretically and empirically how consumers in an individual private longterm health insurance market with front-loaded contracts respond to newly mandated portability requirements of their old-age provisions. To foster competition, effective 2009, the German legislature made the portability of standardized old-age provisions mandatory. Our theoretical model predicts that the portability reform will increase internal plan switching. However, under plausible assumptions, it will not increase external insurer switching. Moreover, the portability reform will enable unhealthier enrollees to reoptimize their plans. We find confirmatory evidence for the theoretical predictions using claims panel data from a big private insurer.

Keywords: switching costs; health plan switching; old-age provisions; portability; individual private health insurance; health policy reform; consumer bargaining; retention (search for similar items in EconPapers)
JEL-codes: G22 I11 I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-cta, nep-hea and nep-ias
Date: 2017-06
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Published in: Journal of Risk and Insurance, first published 19 December 2017

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