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Efficient Transfer of Aging Provisions in Private Health Insurance

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Author Info
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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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 862.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_862

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Related research
Keywords: health insurance; multi-period contracts; competition; aging provisions;

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Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Igal Hendel & Alessandro Lizzeri, 2000. "The Role of Commitment in Dynamic Contracts: Evidence from Life Insurance," NBER Working Papers 7470, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. 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.
  3. Kifmann, Mathias, 2001. " Premium Risk and Managed Care," Journal of Risk and Uncertainty, Springer, vol. 22(3), pages 277-93, May. [Downloadable!] (restricted)
  4. Bradley Herring & Mark Pauly, 2003. "Incentive-Compatible Guaranteed Renewable Health Insurance," NBER Working Papers 9888, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. 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.. [Downloadable!] (restricted)
  6. Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-73, June. [Downloadable!] (restricted)
  7. Baumann, Florian & Meier, Volker & Werding, Martin, 2004. "Transferable Ageing Provisions in Individual Health Insurance Contracts," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Baumann, Florian & Meier, Volker & Werding, Martin, 2004. "Transferable Ageing Provisions in Individual Health Insurance Contracts," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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