Content area
Full text
The Geneva Papers, 2017, 42, (530) 2016 The International Association for the Study of Insurance Economics 1018-5895/16 www.genevaassociation.org
aInstitute for Health Care & Public Management, University of Hohenheim, Stuttgart, Germany. E-mail: [email protected]
bSchool of Risk Management, Insurance and Actuarial Science, St. Johns University, New York, NY, USA. This paper empirically assesses selection effects and determinants of the demand for supplemental health insurance that covers hospital and dental benets in Germany. Our representative data set provides doctor-diagnosed indicators of the individuals health status, risk attitude, demand for medical services and insurance purchases in other lines of insurance, as well as rich demographic and socio-economic information. Controlling for a wide range of individual preferences, we nd evidence that individuals aged 65 and younger with hospital coverage are sicker than those without. In addition, insurance propensity and income are the most important drivers of the demand for supplemental hospital and dental coverage.
The Geneva Papers (2017) 42, 530. doi:10.1057/s41288-016-0023-2
Keywords: supplemental health insurance; asymmetric information; one-sided commitment; insurance demand; German statutory health insurance; insurance propensity
JEL Classication: D82; G22; I11
Article submitted 3 December 2015; accepted 27 July 2016; published online 16 November 2016
Introduction
As a consequence of high and steadily increasing health-care costs, there is a common trend in countries with public health-care systems of incrementally reducing benets. The decision to complement public coverage is left to individuals depending on their nancial ability, preferences and far-sightedness with respect to future health risks. Particularly, supplemental health insurance (SuppHI) is highly relevant in regulated health-care systems with standardised statutory coverage and restricted choice of health-care providers and services, as, e.g. in Germany, France, Belgium and the Netherlands.1 In the U.S. as well, there is a signicant market for SuppHI added on to the social health insurance for the elderly, i.e. Medicare.2 As rising health-care costs may lead to health-care reforms that reduce coverage and increase the nancial responsibility for insureds, supplemental coverage can be a successful way to ll in coverage gaps and also allow individuals to tailor their health insurance according to their needs. Understanding the demand for SuppHI is crucial to better access the potential of these contracts to serve their intended purpose for the
1 Saliba and Ventelou (2007); van de Ven and Schut...