Claudio Sapelli () (Instituto de Economía. Pontificia Universidad Católica de Chile.) Arístides Torche () (Instituto de Economía. Pontificia Universidad Católica de Chile.)
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This paper studies the factors that determine the choice of either pri-vate (ISAPRES) or public (FONASA) health insurance in Chile, by those man-dated by law to purchase health insurance (i.e. dependant workers and retirees). Earnings are generally considered the key factor in making such selection. We attempt to set up whether other variables are important determinants of the choice between ISAPRES and FONASA; and also to understand how people’s characteristics and those of private and public insurance interact to determine those choices. We also compare how the importance of these variables has changed between 1990 and 1994. The study concludes (based on logistic analysis of a large household survey) that the most important variables that determine the selection of public or private insurance are income, age and sector of residence. The signs of the regression coefficients are those forecast by the model, wholy validating the hypothesis put forward, the most important of which is that people make a ratio-nal selection using all the available information. An interesting result is that private information on health status gener-ates an adverse selection against the private insurance system while public in-formation on health status generates an adverse selection against the public insurance system. The first effect disappears in 1994. The second continues, meaning that ceteris paribus, a worse health status (as signaled by public information such as age), results in an adverse selection against the public health system. The selection against the private system is the traditional adverse selec-tion problem and the adverse selection against the public system is solely due to the lack of adjustment to risk of the FONASA premium. Since the first largely disappears in 1994, this indicates that the serious risk selection problem is not produced by the existence of private insurance, but by the incentives that are provided by the design of the Chilean public insurance system.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
Find related papers by JEL classification: 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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