IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v96y2012i9p750-759.html
   My bibliography  Save this article

Do health plans risk-select? An audit study on Germany's Social Health Insurance

Author

Listed:
  • Bauhoff, Sebastian

Abstract

This paper evaluates whether health plans in Germany's Social Health Insurance select on an easily observable predictor of risk: geography. To identify plan behavior separately from concurrent demand-side adverse selection, I implement a double-blind audit study in which plans are contacted by fictitious applicants from different locations. I find that plans are less likely to respond and follow-up with applicants from higher-cost regions, such as West Germany. The results suggest that supply-side selection may emerge even in heavily regulated insurance markets. The prospect of risk selection by firms has implications for studies of demand-side selection and regulatory policy in these settings.

Suggested Citation

  • Bauhoff, Sebastian, 2012. "Do health plans risk-select? An audit study on Germany's Social Health Insurance," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 750-759.
    • Handle: RePEc:eee:pubeco:v:96:y:2012:i:9:p:750-759
    DOI: 10.1016/j.jpubeco.2012.05.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S004727271200059X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2012.05.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shen, Yujing & Ellis, Randall P., 2002. "Cost-minimizing risk adjustment," Journal of Health Economics, Elsevier, vol. 21(3), pages 515-530, May.
    2. Amy Finkelstein & James Poterba, 2014. "Testing for Asymmetric Information Using “Unused Observables” in Insurance Markets: Evidence from the U.K. Annuity Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 81(4), pages 709-734, December.
    3. Hanming Fang & Michael P. Keane & Dan Silverman, 2008. "Sources of Advantageous Selection: Evidence from the Medigap Insurance Market," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 303-350, April.
    4. Cameron, A. Colin & Gelbach, Jonah B. & Miller, Douglas L., 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(2), pages 238-249.
    5. Frank, Richard G. & Glazer, Jacob & McGuire, Thomas G., 2000. "Measuring adverse selection in managed health care," Journal of Health Economics, Elsevier, vol. 19(6), pages 829-854, November.
    6. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643, Elsevier.
    7. van de Ven, Wynand P.M.M. & Beck, Konstantin & Van de Voorde, Carine & Wasem, Jurgen & Zmora, Irit, 2007. "Risk adjustment and risk selection in Europe: 6 years later," Health Policy, Elsevier, vol. 83(2-3), pages 162-179, October.
    8. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, vol. 94(4), pages 991-1013, September.
    9. Yujing Shen & Randall P. Ellis, 2002. "How profitable is risk selection? A comparison of four risk adjustment models," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 165-174, March.
    10. Höppner, Karin & Greß, Stefan & Rothgang, Heinz & Wasem, Jürgen & Braun, Bernard & Buitkamp, Martin, 2005. "Grenzen und Dysfunktionalitäten des Kassenwettbewerbs in der GKV: Theorie und Empirie der Risikolektion in Deutschland," Working papers of the ZeS 04/2005, University of Bremen, Centre for Social Policy Research (ZeS).
    11. Van de ven, Wynand P.M.M. & Ellis, Randall P., 2000. "Risk adjustment in competitive health plan markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 14, pages 755-845, Elsevier.
    12. Nicola Brandt, 2008. "Moving Towards more Sustainable Healthcare Financing in Germany," OECD Economics Department Working Papers 612, OECD Publishing.
    13. Pauly, Mark V., 1984. "Is cream-skimming a problem for the competitive medical market?," Journal of Health Economics, Elsevier, vol. 3(1), pages 87-95, April.
    14. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Randall P. Ellis & Juan Gabriel Fernandez, 2013. "Risk Selection, Risk Adjustment and Choice: Concepts and Lessons from the Americas," IJERPH, MDPI, vol. 10(11), pages 1-34, October.
    2. Glazer, Jacob & McGuire, Thomas G., 2002. "Setting health plan premiums to ensure efficient quality in health care: minimum variance optimal risk adjustment," Journal of Public Economics, Elsevier, vol. 84(2), pages 153-173, May.
    3. Karen Eggleston & Randall P. Ellis & Mingshan Lu, 2007. "Prevention and Dynamic Risk Adjustment," Boston University - Department of Economics - Working Papers Series WP2007-023, Boston University - Department of Economics.
    4. Ronald Eduardo Gómez Suárez, 2007. "Cream-Skimming And Risk Adjustment in Colombian Health Insurance System:: The Public Insurer Case," Archivos de Economía 4295, Departamento Nacional de Planeación.
    5. Karen Eggleston & Anupa Bir, 2009. "Measuring Selection Incentives in Managed Care: Evidence From the Massachusetts State Employee Insurance Program," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 159-175, March.
    6. Cao, Zhun & McGuire, Thomas G., 2003. "Service-level selection by HMOs in Medicare," Journal of Health Economics, Elsevier, vol. 22(6), pages 915-931, November.
    7. Keane, Michael, 2004. "Modeling Health Insurance Choices in “Competitive” Markets," MPRA Paper 55198, University Library of Munich, Germany.
    8. Jacob Glazer & Thomas G. McGuire, 2006. "Contending with Risk Selection in Health Insurance Markets in Germany," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(s1), pages 75-91, May.
    9. repec:clg:wpaper:2007-06 is not listed on IDEAS
    10. Viktor von Wyl & Konstantin Beck, 2016. "Do insurers respond to risk adjustment? A long-term, nationwide analysis from Switzerland," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(2), pages 171-183, March.
    11. Geruso, Michael & McGuire, Thomas G., 2016. "Tradeoffs in the design of health plan payment systems: Fit, power and balance," Journal of Health Economics, Elsevier, vol. 47(C), pages 1-19.
    12. William Jack(Georgetown University), 2004. "Optimal risk adjustment in a model with adverse selection and spatial competition," Working Papers gueconwpa~04-04-15, Georgetown University, Department of Economics.
    13. Glazer, Jacob & McGuire, Thomas G., 2006. "Optimal quality reporting in markets for health plans," Journal of Health Economics, Elsevier, vol. 25(2), pages 295-310, March.
    14. Jack, William, 2006. "Optimal risk adjustment with adverse selection and spatial competition," Journal of Health Economics, Elsevier, vol. 25(5), pages 908-926, September.
    15. Shuli Brammli-Greenberg & Jacob Glazer & Ruth Waitzberg, 2019. "Modest risk-sharing significantly reduces health plans’ incentives for service distortion," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(9), pages 1359-1374, December.
    16. Kifmann, Mathias, 2002. "Community rating in health insurance and different benefit packages," Journal of Health Economics, Elsevier, vol. 21(5), pages 719-737, September.
    17. Eugster, Patrick & Sennhauser, Michèle & Zweifel, Peter, 2010. "Capping risk adjustment?," Journal of Health Economics, Elsevier, vol. 29(4), pages 499-507, July.
    18. Batata, Amber, 2004. "The effect of HMOs on fee-for-service health care expenditures: evidence from medicare revisited," Journal of Health Economics, Elsevier, vol. 23(5), pages 951-963, September.
    19. David M. Cutler & Amy Finkelstein & Kathleen McGarry, 2008. "Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance," American Economic Review, American Economic Association, vol. 98(2), pages 157-162, May.
    20. S. H. C. M. van Veen & R. C. van Kleef & W. P. M. M. van de Ven & R. C. J. A. van Vliet, 2018. "Exploring the predictive power of interaction terms in a sophisticated risk equalization model using regression trees," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1-12, February.
    21. Timothy J. Layton & Randall P. Ellis & Thomas G. McGuire, 2015. "Assessing Incentives for Adverse Selection in Health Plan Payment Systems," NBER Working Papers 21531, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Health insurance; Risk selection; Risk adjustment; Geographic variations; Germany;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:96:y:2012:i:9:p:750-759. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.