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Asymmetric information and the demand for private health insurance in Korea

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  • Lee, Yong-Woo

Abstract

In this article, we examine the relationship between self-assessed health status, defined as ex-ante health risk, and the demand for private health insurance using data from the Korean Longitudinal Study of Aging. Contrary to theoretical predictions, insurance purchases increase with better health. We present an evidence that this phenomenon may be due to the screening on the part of insurers in the Korean private health insurance market.

Suggested Citation

  • Lee, Yong-Woo, 2012. "Asymmetric information and the demand for private health insurance in Korea," Economics Letters, Elsevier, vol. 116(3), pages 284-287.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:284-287
    DOI: 10.1016/j.econlet.2012.03.021
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    References listed on IDEAS

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    1. Ellis, Randall P. & McGuire, Thomas G., 2007. "Predictability and predictiveness in health care spending," Journal of Health Economics, Elsevier, vol. 26(1), pages 25-48, January.
    2. Kristian Bolin & Daniel Hedblom & Anna Lindgren & Bjorn Lindgren, 2010. "Asymmetric Information and the Demand for Voluntary Health Insurance in Europe," NBER Working Papers 15689, National Bureau of Economic Research, Inc.
    3. Liran Einav & Amy Finkelstein, 2011. "Selection in Insurance Markets: Theory and Empirics in Pictures," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 115-138, Winter.
    4. Lokshin, Michael & Ravallion, Martin, 2005. "Rich and powerful?: Subjective power and welfare in Russia," Journal of Economic Behavior & Organization, Elsevier, vol. 56(2), pages 141-172, February.
    5. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    6. Denise Doiron & Glenn Jones & Elizabeth Savage, 2008. "Healthy, wealthy and insured? The role of self‐assessed health in the demand for private health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 317-334, March.
    7. Office of Health Economics, 2007. "The Economics of Health Care," For School 001490, Office of Health Economics.
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    Cited by:

    1. Benlagha, Noureddine & Hemrit, Wael, 2020. "Internet use and insurance growth: evidence from a panel of OECD countries," Technology in Society, Elsevier, vol. 62(C).
    2. Ling Tian & Haisong Dong, 2023. "Study on the Dynamic Relationship between Chinese Residents’ Individual Characteristics and Commercial Health Insurance Demand," IJERPH, MDPI, vol. 20(6), pages 1-20, March.
    3. Nikos Nomikos & Panagiota Naoum & Vasiliki Naoum & Kostas Athanasakis & John Kyriopoulos & Elpida Pavi, 2022. "Individuals' personal characteristics associated with private health insurance policy possession in Greece," International Journal of Health Planning and Management, Wiley Blackwell, vol. 37(1), pages 361-371, January.
    4. Johar, Meliyanni & Savage, Elizabeth, 2012. "Sources of advantageous selection: Evidence using actual health expenditure risk," Economics Letters, Elsevier, vol. 116(3), pages 579-582.
    5. Lan Nguyen & Andrew C. Worthington, 2023. "Moral hazard in Australian private health insurance: the case of dental care services and extras cover," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(1), pages 157-176, January.

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    More about this item

    Keywords

    Asymmetric information; Self-assessed health status; Private health insurance;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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