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Price Elasticities and Social Health Insurance Choice in Germany: A Dynamic Panel Data Approach

  • Marcus Tamm

    ()

  • Harald Tauchmann

    ()

  • Stefan Greß
  • Jürgen Wasem

In 1996 free choice of health insurers has been introduced in the German social health insurance scheme. Competition between insurers was supposed to increase efficiency. A crucial precondition for effective competition among health insurers is that consumers search for lower-priced health insurers.We test this hypothesis by estimating the price elasticities of insurers’ market shares. We use unique panel data and specify a dynamic panel model to explain changes in market shares. Estimation results suggest that short-run price elasticities are smaller than previously found by other studies. In the long-run, however, estimation results suggest substantial price effects.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung in its series RWI Discussion Papers with number 0028.

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Length: 26 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:rwi:dpaper:0028
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  1. Scanlon, Dennis P. & Chernew, Michael & McLaughlin, Catherine & Solon, Gary, 2002. "The impact of health plan report cards on managed care enrollment," Journal of Health Economics, Elsevier, vol. 21(1), pages 19-41, January.
  2. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  3. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  4. Gre[ss], Stefan & Groenewegen, Peter & Kerssens, Jan & Braun, Bernard & Wasem, Juergen, 2002. "Free choice of sickness funds in regulated competition: evidence from Germany and The Netherlands," Health Policy, Elsevier, vol. 60(3), pages 235-254, June.
  5. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
  6. Stephen Bond & Céline Nauges & Frank Windmeijer, 2002. "Unit Roots and Identification in Autoregressive Panel Data Models: A Comparison of Alternative Tests," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 C5-4, International Conferences on Panel Data.
  7. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  8. Roger Feldman & Michael Finch & Bryan Dowd & Steven Cassou, 1989. "The Demand for Employment-Based Health Insurance Plans," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 115-142.
  9. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
  10. Anne Beeson Royalty & Neil Solomon, 1999. "Health Plan Choice: Price Elasticities in a Managed Competition Setting," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 1-41.
  11. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  12. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  13. David J. Mckenzie, 2001. "Estimation of AR(1) models with unequally spaced pseudo-panels," Econometrics Journal, Royal Economic Society, vol. 4(1), pages 40.
  14. Johannes Schwarze & Hanfried H. Andersen, 2001. "Kassenwechsel in der gesetzlichen Krankenversicherung: welche Rolle spielt der Beitragssatz?," Discussion Papers of DIW Berlin 267, DIW Berlin, German Institute for Economic Research.
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