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Risk-Adjustment in Long-Term Health Insurance Contracts in Germany

Author

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  • Johann Eekhoff

    (University of Cologne, Economic Policy Departement, Albertus-Magnus-Platz, D-50923 Cologne, Germany.)

  • Markus Jankowski

    (University of Cologne, Economic Policy Departement, Albertus-Magnus-Platz, D-50923 Cologne, Germany.)

  • Anne Zimmermann

    (University of Cologne, Economic Policy Departement, Albertus-Magnus-Platz, D-50923 Cologne, Germany.)

Abstract

In the private health insurance (phi) market in Germany ageing provisions are used to reduce age-related premium increases in long-term contracts. Currently, the provisions are not transferred if the insured person switches to another provider. Thus, there are no incentives for the insured to cancel their old policy because they would have to pay higher premiums for the same services under a new contract due to higher age and the loss of their ageing provisions. There is a long-standing discussion if it is possible to intensify competition on the phi-market in Germany. The main question is whether the transferring of ageing provisions would lead to risk selection or not. We have reconsidered Meyer's model of transferable risk-adjusted ageing provisions.1 It has been shown that it is indeed possible to prevent risk selection in a competitive phi-market. We will present a number of counter-arguments to the most frequently stated criticism of the model.2The Geneva Papers (2006) 31, 692–704. doi:10.1057/palgrave.gpp.2510097

Suggested Citation

  • Johann Eekhoff & Markus Jankowski & Anne Zimmermann, 2006. "Risk-Adjustment in Long-Term Health Insurance Contracts in Germany," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(4), pages 692-704, October.
    • Handle: RePEc:pal:gpprii:v:31:y:2006:i:4:p:692-704
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    Citations

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    Cited by:

    1. 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.
    2. Christian Bührer & Stefan Fetzer & Christian Hagist, 2018. "Adverse Selection in the German Health Insurance System – The Case of Civil Servants," WHU Working Paper Series - Economics Group 18-06, WHU - Otto Beisheim School of Management.
    3. Susanna Kochskämper, 2012. "Reformdebatten in der Krankenversicherung vor dem Hintergrund des europäischen Binnenmarktes," Otto-Wolff-Institut Discussion Paper Series 02/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    4. 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.
    5. 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.
    6. Annette Hofmann & Mark Browne, 2013. "One-sided commitment in dynamic insurance contracts: Evidence from private health insurance in Germany," Journal of Risk and Uncertainty, Springer, vol. 46(1), pages 81-112, February.
    7. Bührer, Christian & Fetzer, Stefan & Hagist, Christian, 2020. "Adverse selection in the German Health Insurance System – the case of civil servants," Health Policy, Elsevier, vol. 124(8), pages 888-894.
    8. Christine Arentz & Johann Eekhoff & Susanna Kochskämper, 2012. "Private health insurance: a role model for European health systems," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(5), pages 615-621, October.

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