In 1996 free choice of health insurers has been introduced in the German social health insurance scheme. Competition between insurers was supposed to increase efficiency. A crucial precondition for effective competition among health insurers is that consumers search for lower-priced health insurers.We test this hypothesis by estimating the price elasticities of insurers’ market shares. We use unique panel data and specify a dynamic panel model to explain changes in market shares. Estimation results suggest that short-run price elasticities are smaller than previously found by other studies. In the long-run, however, estimation results suggest substantial price effects.
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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung in its series RWI Discussion Papers with number
0028.
Find related papers by JEL classification: I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
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