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

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  • Juan Pablo Atal
  • Hanming Fang
  • Martin Karlsson
  • Nicolas R. Ziebarth

Abstract

We study theoretically and empirically how consumers in an individual private long‐term health insurance market with front‐loaded contracts respond to a newly mandated portability requirement 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.

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  • Juan Pablo Atal & Hanming Fang & Martin Karlsson & Nicolas R. Ziebarth, 2019. "Exit, Voice, or Loyalty? An Investigation Into Mandated Portability of Front‐Loaded Private Health Plans," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(3), pages 697-727, September.
    • Handle: RePEc:bla:jrinsu:v:86:y:2019:i:3:p:697-727
    DOI: 10.1111/jori.12233
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    Cited by:

    1. Werbeck, Anna & Wübker, Ansgar & Ziebarth, Nicolas R., 2021. "Cream skimming by health care providers and inequality in health care access: Evidence from a randomized field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1325-1350.
    2. Juan Pablo Atal & Hanming Fang & Martin Karlsson & Nicolas R. Ziebarth, 2020. "Long-Term Health Insurance: Theory Meets Evidence," PIER Working Paper Archive 20-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    3. Juan Pablo Atal, 2019. "Lock-in in Dynamic Health Insurance Contracts: Evidence from Chile," PIER Working Paper Archive 19-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    4. Juan Pablo Atal & Hanming Fang & Martin Karlsson & Nicolas R. Ziebarth, 2020. "German Long-Term Health Insurance: Theory Meets Evidence," NBER Working Papers 26870, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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