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Efficient Transfer of Aging Provisions in Private Health Insurance

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  • Volker Meier

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Abstract

In long-term private health insurance contracts, aging provisions are used to flatten premium profiles. An individual would like to change insurers if she perceives a low service quality. The first-best optimum is characterized by provision transfers which are higher for high risks and may be negative for low risks. Should the actual risk status not be verifiable, provision transfers have to be uniform. Efficient transfers will equalize consumption across periods and states if high risks are deterred from switching. Otherwise, the optimum transfer balances the distortions of incentives for high-risk and low-risk individuals.

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File URL: http://hdl.handle.net/10.1007/s00712-005-0121-2
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Bibliographic Info

Article provided by Springer in its journal Journal of Economics - Zeitschrift für Nationalökonomie.

Volume (Year): 84 (2005)
Issue (Month): 3 (05)
Pages: 249-275

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Handle: RePEc:kap:jeczfn:v:84:y:2005:i:3:p:249-275

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Web page: http://www.springerlink.com/link.asp?id=108909

Related research

Keywords: health insurance; premium risk; aging provisions; D91; G22; I18;

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References

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  1. Florian Baumann & Volker Meier & Martin Werding, 2006. "Transferable Ageing Provisions in Individual Health Insurance Contracts," Ifo Working Paper Series Ifo Working Paper No. 32, Ifo Institute for Economic Research at the University of Munich.
  2. Igal Hendel & Alessandro Lizzeri, 2003. "The Role Of Commitment In Dynamic Contracts: Evidence From Life Insurance," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 299-327, February.
  3. Pauly, Mark V & Kunreuther, Howard & Hirth, Richard, 1995. "Guaranteed Renewability in Insurance," Journal of Risk and Uncertainty, Springer, vol. 10(2), pages 143-56, March.
  4. Bradley Herring & Mark Pauly, 2003. "Incentive-Compatible Guaranteed Renewable Health Insurance," NBER Working Papers 9888, National Bureau of Economic Research, Inc.
  5. Kifmann, Mathias, 2001. " Premium Risk and Managed Care," Journal of Risk and Uncertainty, Springer, vol. 22(3), pages 277-93, May.
  6. Frick, Kevin D, 1998. "Consumer Capital Market Constraints and Guaranteed Renewable Insurance," Journal of Risk and Uncertainty, Springer, vol. 16(3), pages 271-78, July-Aug..
  7. Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-73, June.
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Citations

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Cited by:
  1. Florian Baumann & Volker Meier & Martin Werding, 2004. "Transferable Ageing Provisions in Individual Health Insurance Contracts," CESifo Working Paper Series 1116, CESifo Group Munich.
  2. Werding, Martin & McLennan, Stuart, 2011. "International portability of health-cost coverage : concepts and experience," Social Protection Discussion Papers 63929, The World Bank.
  3. Christine Arentz & Johann Eekhoff & Susanna Kochskämper, 2012. "Private health insurance: a role model for European health systems," The European Journal of Health Economics, Springer, vol. 13(5), pages 615-621, October.
  4. Volker Meier, 2003. "Solving the Premium Risk Problem, Insurer Switches, and Transfers of Aging Provisions," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(3), pages 20-23, October.
  5. Rigmar Osterkamp, 2003. "Reform des deutschen Gesundheitswesens: Bürgerversicherung oder Pauschalbeiträge?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 56(10), pages 11-14, 05.
  6. Martin Werding & Stuart McLennan, 2012. "International Portability of Health-Cost Cover: Mobility, Insurance, and Redistribution," CESifo Working Paper Series 3952, CESifo Group Munich.

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