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Risk Selection and Complementary Health Insurance: The Swiss Approach

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  • Kifmann, Mathias

Abstract

A common approach to avoid risk selection in health insurance markets is to define and enforce a community-rated basic benefit package. The market for complementary insurance is usually completely separate from the market for basic health insurance. In Switzerland, however, the basic benefit package and complementary insurance are offered by the same insurer. Risk-based premiums are allowed with respect to complementary insurance. In this paper, the Swiss integration approach is compared to the separation approach. It is shown that under the integration approach insurers creamskim by selling complementary insurance to low risks at a discount. Nevertheless, the integration approach can be Pareto-superior if the cost savings due to the integration of basic and complementary insurance are sufficiently large.

Suggested Citation

  • Kifmann, Mathias, 2005. "Risk Selection and Complementary Health Insurance: The Swiss Approach," Discussion Papers, Series I 328, University of Konstanz, Department of Economics.
    • Handle: RePEc:zbw:kondp1:328
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    File URL: https://www.econstor.eu/bitstream/10419/23024/1/328.pdf
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    References listed on IDEAS

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    1. Martin Schellhorn, 2001. "The effect of variable health insurance deductibles on the demand for physician visits," Health Economics, John Wiley & Sons, Ltd., vol. 10(5), pages 441-456, July.
    2. Danzon, Patricia M., 2002. "Welfare effects of supplementary insurance: a comment," Journal of Health Economics, Elsevier, vol. 21(5), pages 923-926, September.
    3. Thomas G. McGuire & Jacob Glazer, 2000. "Optimal Risk Adjustment in Markets with Adverse Selection: An Application to Managed Care," American Economic Review, American Economic Association, vol. 90(4), pages 1055-1071, September.
    4. Kifmann, Mathias, 2002. "Community rating in health insurance and different benefit packages," Journal of Health Economics, Elsevier, vol. 21(5), pages 719-737, September.
    5. Francesca Colombo, 2001. "Towards More Choice in Social Protection?: Individual Choice of Insurer in Basic Mandatory Health Insurance in Switzerland," OECD Labour Market and Social Policy Occasional Papers 53, OECD Publishing.
    6. Pauly, Mark V., 1984. "Is cream-skimming a problem for the competitive medical market?," Journal of Health Economics, Elsevier, vol. 3(1), pages 87-95, April.
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    Cited by:

    1. Mathias Kifmann & Normann Lorenz, 2011. "Optimal cost reimbursement of health insurers to reduce risk selection," Health Economics, John Wiley & Sons, Ltd., vol. 20(5), pages 532-552, May.
    2. Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2007. "The influence of supplementary health insurance on switching behaviour: evidence on Swiss data," PSE Working Papers halshs-00587785, HAL.
    3. Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2007. "The influence of supplementary health insurance on switching behaviour: evidence on Swiss data," PSE Working Papers halshs-00587785, HAL.
    4. Ellert, Alexander & Urmann, Oliver, 2012. "Competition in the market for supplementary health insurance: The case of competing nonprofit sickness funds," Working Papers on Risk and Insurance 25 [rev.], University of Hamburg, Institute for Risk and Insurance.
    5. Kifmann Mathias & Nell Martin, 2014. "Fairer Systemwettbewerb zwischen gesetzlicher und privater Krankenversicherung," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(1), pages 75-87, February.
    6. Willemse-Duijmelinck, Daniëlle M.I.D. & van de Ven, Wynand P.M.M. & Mosca, Ilaria, 2017. "Supplementary insurance as a switching cost for basic health insurance: Empirical results from the Netherlands," Health Policy, Elsevier, vol. 121(10), pages 1085-1092.
    7. Kifmann, Mathias & Nell, Martin, 2013. "Fairer Systemwettbewerb zwischen gesetzlicher und privater Krankenversicherung," hche Research Papers 06, University of Hamburg, Hamburg Center for Health Economics (hche).
    8. repec:dau:papers:123456789/1623 is not listed on IDEAS

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    More about this item

    Keywords

    health insurance; risk selection; complementary insurance;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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