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Pricing behaviour of nonprofit insurers in a weakly competitive social health insurance market

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  • Douven, Rudy C.H.M.
  • Schut, Frederik T.

Abstract

In this paper we examine the pricing behaviour of nonprofit health insurers in the Dutch social health insurance market. Since for-profit insurers were not allowed in this market, potential spillover effects from the presence of for-profit insurers on the behaviour of nonprofit insurers were absent. Using a panel data set for all health insurers operating in the Dutch social health insurance market over the period 1996-2004, we estimate a premium model to determine which factors explain the price setting behaviour of nonprofit health insurers. We find that financial stability rather than profit maximisation offers the best explanation for health plan pricing behaviour. In the presence of weak price competition, health insurers did not set premiums to maximize profits. Nevertheless, our findings suggest that regulations on financial reserves are needed to restrict premiums.

Suggested Citation

  • Douven, Rudy C.H.M. & Schut, Frederik T., 2011. "Pricing behaviour of nonprofit insurers in a weakly competitive social health insurance market," Journal of Health Economics, Elsevier, vol. 30(2), pages 439-449, March.
  • Handle: RePEc:eee:jhecon:v:30:y:2011:i:2:p:439-449
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    References listed on IDEAS

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    1. Schut, Frederik T. & Hassink, Wolter H. J., 2002. "Managed competition and consumer price sensitivity in social health insurance," Journal of Health Economics, Elsevier, vol. 21(6), pages 1009-1029, November.
    2. Ivaldi, Marc & Jullien, Bruno & Rey, Patrick & Seabright, Paul & Tirole, Jean, 2003. "The Economics of Tacit Collusion," IDEI Working Papers 186, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. Machiel Dijk & Marc Pomp & Rudy Douven & Trea Laske-Aldershof & Erik Schut & Willem Boer & Anne Boo, 2008. "Consumer price sensitivity in Dutch health insurance," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 225-244, December.
    4. Rudy Douven, 2004. "Risk adjustment in the Netherlands; an analysis of insurers' health care expenditures," CPB Discussion Paper 39, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Lieverdink, Harm, 2001. "The marginal success of regulated competition policy in the Netherlands," Social Science & Medicine, Elsevier, vol. 52(8), pages 1183-1194, April.
    6. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    7. Rudy Douven & Marco Ligthart & H. Lieverdink & I. Vermeulen, 2007. "Measuring annual price elasticities in Dutch health insurance; a new method," CPB Discussion Paper 90, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Moriya, Asako S. & Vogt, William B. & Gaynor, Martin, 2010. "Hospital prices and market structure in the hospital and insurance industries," Health Economics, Policy and Law, Cambridge University Press, vol. 5(04), pages 459-479, October.
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    Cited by:

    1. Rudy Douven & Katalin Katona & Erik Schut & Victoria Shestalova, 2017. "Switching gains and health plan price elasticities: 20 years of managed competition reforms in the Netherlands," CPB Discussion Paper 343, CPB Netherlands Bureau for Economic Policy Analysis.

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