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Demand Patterns for Treatment Insurance in Norway

  • Karl Ove Aarbu
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    In Scandinavia, the provision of health care services has been, almost entirely, the responsibility of the public health care system. However, in the last five to seven years there has been remarkable growth in the private health care market. These health care services are obtained normally through insurance contracts. In this paper, I seek explanations for this phenomenon, using data from Norway. First, using available market data, I document that the market for private treatment insurance—often labelled as “jump the treatment queue insurance”—is growing rapidly. Thereafter, I present a theoretical model that identifies primary drivers for individual demand for treatment insurance. The third step is to analyse a unique survey data set that is combined with aggregate county data on treatment queues. The overall results indicate that public waiting lists affect the demand for privately bought insurance, while employer-provided insurance does not seem to be affected. I find strong preference for this type of insurance among smokers and the self-employed. Moreover, income is an important determinant of insurance demand.

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    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3021.

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    Date of creation: 2010
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    Handle: RePEc:ces:ceswps:_3021
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    1. V. Kerry Smith & Donald H. Taylor & Frank A. Sloan & F. Reed Johnson & William H. Desvousges, 2001. "Do Smokers Respond To Health Shocks?," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 675-687, November.
    2. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
    3. W. Kip Viscusi & Joni Hersch, 2001. "Cigarette Smokers As Job Risk Takers," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 269-280, May.
    4. Amy Finkelstein & James Poterba, 2006. "Testing for Asymmetric Information Using 'Unused Observables' in Insurance Markets: Evidence from the U.K. Annuity Market," NBER Working Papers 12112, National Bureau of Economic Research, Inc.
    5. Liran Einav & Amy Finkelstein & Jonathan Levin, 2009. "Beyond Testing: Empirical Models of Insurance Markets," NBER Working Papers 15241, National Bureau of Economic Research, Inc.
    6. Besley, Timothy & Hall, John & Preston, Ian, 1999. "The demand for private health insurance: do waiting lists matter?," Journal of Public Economics, Elsevier, vol. 72(2), pages 155-181, May.
    7. Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 73-95, April.
    8. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
    9. Amy Finkelstein & Kathleen McGarry, 2006. "Multiple Dimensions of Private Information: Evidence from the Long-Term Care Insurance Market," American Economic Review, American Economic Association, vol. 96(4), pages 938-958, September.
    10. William H. Greene & David A. Hensher, 2008. "Modeling Ordered Choices: A Primer and Recent Developments," Working Papers 08-26, New York University, Leonard N. Stern School of Business, Department of Economics.
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