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: By insuring policyholders against contemporaneous health expenditure shocks and future reclassification risk, long-term health insurance contracts are a viable alternative to community-rated short-term contracts with an individual mandate. German long-term health insurance (GLTHI) is the largest market for private long-term health insurance contracts in the world. It features a simple design with initial risk-rating followed by guaranteed-renewable constant premiums over the lifecycle. We estimate the key ingredients of a life-cycle model to assess the welfare effects of the GLTHI contract and compare them to the optimal contract. This comparison provides further lessons about the trade-offs of long-term health insurance design.

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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