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Risk selection in the German public health insurance system

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  • Robert Nuscheler

    (Wissenschaftszentrum Berlin, Germany)

  • Thomas Knaus

    (Bundesministerium für Wirtschaft und Arbeit (Federal Ministry of Economics and Labour), Germany)

Abstract

The German statutory health insurance market was exposed to competition in 1996. To limit direct risk selection the regulator required open enrollment. As the risk compensation scheme, introduced in 1994, is highly incomplete, substantial incentives for risk selection exist. Due to their low premiums, company-based sickness funds have been able to attract a lot of new members. We analyze, using data from the German Socio-Economic Panel, the determinants of switching behavior from 1995 to 2000. There is no evidence for selection by funds. The success of the company-based sickness funds originates in incomplete risk adjustment together with the negative correlation between health status and switching costs. Copyright © 2005 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 14 (2005)
Issue (Month): 12 ()
Pages: 1253-1271

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Handle: RePEc:wly:hlthec:v:14:y:2005:i:12:p:1253-1271

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. David M. Cutler & Richard J. Zeckhauser, 1998. "Adverse Selection in Health Insurance," NBER Chapters, in: Frontiers in Health Policy Research, volume 1, pages 1-32 National Bureau of Economic Research, Inc.
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  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. Friedrich Breyer & Martin Heineck & Normann Lorenz, 2003. "Determinants of health care utilization by German sickness fund members - with application to risk adjustment," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 367-376.
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  14. 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.
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