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Demand and Selection Effects in Supplemental Health Insurance in Germany

Author

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  • Renate Lange
  • Jörg Schiller
  • Petra Steinorth

Abstract

This paper empirically assesses the selection effects and determinants of the demand for supple-mental health insurance that covers hospital and dental benefits in Germany. Our representative dataset provides doctor-diagnosed indicators of the individual’s health status, risk attitude, demand for medical services and insurance purchases in other lines of insurance as well as rich demographic and socioeconomic information. Controlling for a wide range of individual preferences, we find evidence of adverse selection for individuals aged 65 and younger for hospital coverage despite initial individual underwriting by insurers. The reverse is true for individuals older than 65; individuals with supplemental hospital coverage are healthier on average. In addition, insurance affinity and income are the most important drivers of the demand for both types of coverage.

Suggested Citation

  • Renate Lange & Jörg Schiller & Petra Steinorth, 2015. "Demand and Selection Effects in Supplemental Health Insurance in Germany," SOEPpapers on Multidisciplinary Panel Data Research 757, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp757
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.505648.de/diw_sp0757.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Patricia H. Born & E. Tice Sirmans, 2020. "Restrictive Rating and Adverse Selection in Health Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 919-933, December.
    3. Aida Isabel Tavares, 2020. "Voluntary private health insurance demand determinants and risk preferences: Evidence from SHARE," International Journal of Health Planning and Management, Wiley Blackwell, vol. 35(3), pages 685-703, May.

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    More about this item

    Keywords

    Supplemental health insurance; adverse selection; insurance demand; German Statutory Health Insurance; insurance affinity;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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