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The effect of health on acute care supplemental insurance ownership: an empirical analysis

  • Amir Shmueli

    (The Hebrew University and the Gertner Institute for Health Policy Research, Jerusalem, Israel)

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    The empirical effect of health status on private insurance ownership is a mixture of the effect of health on the demand for insurance (subjected to adverse selection) and its effect on the insurer's underwriting practice (subjected to risk-selection). Using bivariate partial observability probit models, this paper provides an empirical identification of health effects on the probability of application and on the probability of rejection in the Israeli market for acute care supplemental health insurance. The analysis shows that while the reduced-form health effect on ownership is negligible, the structural effects are sizeable and indicate that sicker individuals are more likely to apply, but are also more likely to be rejected. The policy implications of the above findings are discussed in the context of the Israeli health system. Copyright © 2001 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.616
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    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 10 (2001)
    Issue (Month): 4 ()
    Pages: 341-350

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    Handle: RePEc:wly:hlthec:v:10:y:2001:i:4:p:341-350
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
    2. Davidson, Bruce N. & Sofaer, Shoshanna & Gertler, Paul, 1992. "Consumer information and biased selection in the demand for coverage supplementing medicare," Social Science & Medicine, Elsevier, vol. 34(9), pages 1023-1034, May.
    3. �ngel Marcos Vera-Hernández, 1999. "Duplicate coverage and demand for health care. The case of Catalonia," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 579-598.
    4. John M. Abowd & Henry S. Farber, 1982. "Job queues and the union status of workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
    5. Shmueli, Amir, 1998. "Supplemental health insurance ownership in Israel: An empirical analysis and some implications," Social Science & Medicine, Elsevier, vol. 46(7), pages 821-829, April.
    6. Dennis G. Shea & R. Patrick Stewart, 1995. "Demand for insurance by elderly persons: Private purchases and employer provision," Health Economics, John Wiley & Sons, Ltd., vol. 4(4), pages 315-326, 07.
    7. van de Ven, Wynand P. M. M. & van Vliet, ReneC. J. A., 1995. "Consumer information surplus and adverse selection in competitive health insurance markets: An empirical study," Journal of Health Economics, Elsevier, vol. 14(2), pages 149-169, June.
    8. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
    9. Ettner, Susan L., 1997. "Adverse selection and the purchase of Medigap insurance by the elderly," Journal of Health Economics, Elsevier, vol. 16(5), pages 543-562, October.
    10. Wolfe, John R. & Goddeeris, John H., 1991. "Adverse selection, moral hazard, and wealth effects in the medigap insurance market," Journal of Health Economics, Elsevier, vol. 10(4), pages 433-459.
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