Insurance Search and Switching Behavior

Jonneke Bolhaar, Bas van der Klaauw and Maarten Lindeboom ()

No 10-072/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper resulted in a publication in 'De Economist' , 2015, 163, 25-60. This paper looks into the search behavior of consumers in the market for health insurance contracts. We consider the recent health insurance reform in The Netherlands, where a private-public mix of insurance provision was replaced by a system based on managed competition. Although all insurers offer the same basic package (determined by the government), there is substantial premium dispersion. We develop a simple consumer search model containing the main features of the Dutch health insurance system. This model provides us with a number of hypotheses, which we test using data from the Dutch Health Care Consumer Panel. The data confirm the standard predictions on consumer choice (i.e. there is adverse selection and a lower premium increases coverage). We also find that consumers with lower search costs are more likely to receive a group contract offer. This generates a situation of price discrimination where individuals without group contracts and higher search costs pay higher premiums and buy lower insurance coverage.

Keywords: health insurance; consumer search behavior; Dutch health insurance reform (search for similar items in EconPapers)
JEL-codes: D83 I11 (search for similar items in EconPapers)
Date: 2010-07-20
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Insurance Search and Switching Behavior (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20100072

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