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Subscribing to Supplemental Health Insurance in France: A Dynamic Analysis of Adverse Selection

Author

Listed:
  • Carine Franc

    () (Cermes, Inserm U988, CNRS UMR8211, IRDES)

  • Marc Perronnin

    () (IRDES institut for research and information in health economics)

  • Aurélie Pierre

    () (IRDES institut for research and information in health economics)

Abstract

Adverse selection, which is well described in the theoretical literature on insurance, remains relatively difficult to study empirically. The traditional approach, which focuses on the binary decision of “covered” or “not”, potentially misses the main effects because heterogeneity may be very high among the insured. In the French context, which is characterized by universal but incomplete public health insurance (PHI), we study the determinants of the decision to subscribe to supplemental health insurance (SHI) in addition to complementary health insurance (CHI). This work permits to analyze health insurance demand at the margin. Using a panelized dataset, we study the effects of both individual state of health, which is measured by age and previous individual health spending, and timing on the decision to subscribe. One striking result is the changing role of health risk over time, illustrating that adverse selection occurs immediately after the introduction of SHI. After the initial period, the effects of health risks (such as doctors’ previous health expenditures) diminish over time and financial risks (such as dental and optical expenses and income) remain significant. These results may highlight the inconsistent effects of health risks on the demand for insurance and the challenges of studying adverse selection.

Suggested Citation

  • Carine Franc & Marc Perronnin & Aurélie Pierre, 2010. "Subscribing to Supplemental Health Insurance in France: A Dynamic Analysis of Adverse Selection," Working Papers DT35, IRDES institut for research and information in health economics, revised Dec 2010.
  • Handle: RePEc:irh:wpaper:dt35
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    File URL: http://www.irdes.fr/EspaceAnglais/Publications/WorkingPapers/DT35SubscribingSupplementalHealthInsurance.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Patrick Bajari & Han Hong & Ahmed Khwaja, 2006. "Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis," NBER Working Papers 12445, National Bureau of Economic Research, Inc.
    2. Thomas C. Buchmueller & Agnès Couffinhal & Michel Grignon & Marc Perronnin, 2004. "Access to physician services: does supplemental insurance matter? Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 669-687.
    3. Denise Doiron & Glenn Jones & Elizabeth Savage, 2008. "Healthy, wealthy and insured? The role of self-assessed health in the demand for private health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 317-334.
    4. Pierre-Andre Chiappori & Bernard Salanie, 2000. "Testing for Asymmetric Information in Insurance Markets," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 56-78, February.
    5. Ellis, Randall P, 1989. "Employee Choice of Health Insurance," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 215-223, May.
    6. 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.
    7. Buchmueller, Thomas C. & Feldstein, Paul J., 1997. "The effect of price on switching among health plans," Journal of Health Economics, Elsevier, vol. 16(2), pages 231-247, April.
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    Citations

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    Cited by:

    1. Catherine Pollak, 2012. "Employed and Happy despite Weak Health? Labour Market Participation and Job Quality of Older Workers with Disabilities," Working Papers DT45, IRDES institut for research and information in health economics, revised Mar 2012.
    2. Luiz Andrade & Catherine Sermet & Sylvain Pichetti, 2016. "Entry time effects and follow-on drug competition," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 45-60, January.
    3. Caroline Berchet & Nicolas Sirven, 2012. "Cross-Country Performance in Social Integration of Older Migrants. A European Perspective," Working Papers DT46, IRDES institut for research and information in health economics, revised Mar 2012.
    4. Mohamed Ali Ben Halima & Thierry Debrand & Camille Regaert, 2012. "Sick Leaves: Understanding Disparities Between French Departments," Working Papers DT50, IRDES institut for research and information in health economics, revised Oct 2012.
    5. Catherine Pollak & Nicolas Sirven, 2012. "Active Ageing Beyond the Labour Market: Evidence on Work Environment Motivations," Working Papers DT48, IRDES institut for research and information in health economics, revised May 2012.

    More about this item

    Keywords

    Supplemental health insurance; adverse selection; health insurance demand; longitudinal analysis.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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