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Exit, Voice or Loyalty? An Investigation into Mandated Portability of Front-Loaded Private Health Plans

Listed author(s):
  • Atal, Juan Pablo

    ()

    (University of Pennsylvania)

  • Fang, Hanming

    ()

    (University of Pennsylvania)

  • Karlsson, Martin

    ()

    (University of Duisburg-Essen)

  • Ziebarth, Nicolas R.

    ()

    (Cornell University)

We study theoretically and empirically how consumers in an individual private longterm health insurance market with front-loaded contracts respond to newly mandated portability requirements of their old-age provisions. To foster competition, effective 2009, the German legislature made the portability of standardized old-age provisions mandatory. Our theoretical model predicts that the portability reform will increase internal plan switching. However, under plausible assumptions, it will not increase external insurer switching. Moreover, the portability reform will enable unhealthier enrollees to reoptimize their plans. We find confirmatory evidence for the theoretical predictions using claims panel data from a big private insurer.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10871.

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Length: 40 pages
Date of creation: Jun 2017
Publication status: forthcoming in: Journal of Risk and Insurance
Handle: RePEc:iza:izadps:dp10871
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