Testing for Asymmetric Information in Private Health Insurance * (original) (raw)

Testing for adverse selection into private medical insurance

2006

We develop a test for adverse selection and use it to examine private health insurance markets. In contrast to earlier papers that consider a purely private system or a system in which private insurance supplements a public system, we focus our attention on a system where privately funded health care is substitutive of the publicly funded one. Using a model

Moody for their contribution to our understanding of the private health insurance market

2011

We test for asymmetric information in the UK private health insurance (PHI) market. In contrast to earlier research that considers either a purely private system or one where private insurance is complementary to public insurance, PHI is substitutive of the public system in the UK. Using a theoretical model of competition among insurers incorporating this characteristic, we link the type of selection (adverse or propitious) with the existence of risk-related information asymmetries. Using the British Household Panel Survey, we …nd evidence that adverse selection is present in the PHI market, which leads us to conclude that such information asymmetries exist.

An Examination of Adverse Selection in the Public Provision of Insurance

The Geneva Risk and Insurance Review, 2013

Using a unique data set from Florida's residual property insurer, we test for adverse selection in the public provision of homeowners' insurance in Florida. We find a significant relationship between the losses and deductible choices of insureds in Florida's residual homeowners' insurance market. This relationship provides strong evidence of the existence of an adverse selection problem in Florida's residual property insurance market. While this relationship is important to Florida regulators (and taxpayers) specifically, a finding of an adverse selection problem in residual markets in general has implications more broadly for government providers of insurance as an adverse selection problem in these settings will impact the public policy debates and decisions involving these markets.

Prices Matter: Comparing Two Tests of Adverse Selection in Health Insurance

2012

A standard test for adverse selection in health insurance examines whether people with characteristics predicting high health care utilization are more likely to buy insurance (or buy more generous insurance). George Akerlof's theory of adverse selection suggests a test based on prices: those who purchase insurance at the regular price will have higher expected utilization than those buying insurance when offered a deeply discounted price. Both tests provide (different) lower bounds on self-selection. We use a randomly allocated coupon for deeply discounted health insurance in rural Cambodia coupled with a longitudinal survey to test for adverse selection. While the standard test can show only a small amount of self-selection, the Prices test shows vastly more self-selection-providing a much more informative lower bound.

Who Took out Additional Supplementary Health Insurance? A dynamic Analysis of Adverse-Selection

I n s t i t u t e f o r R e s e a r c h a n d I n f o r m a t i o n i n H e a l t h E c o n o m i c s no 150-January 2010 According to economic theory, individuals choose their insurance cover levels in virtue of anticipated health expenditures. Thus, they partially reveal their health risks. Yet, on the French health insurance market this hypothesis, known as 'adverse-selection', has only been tested on the supplementary health insurance purchase decision. However, the supplementary health insurance market is extremely heterogeneous, at least in the same way as beneficiaries' health risk levels. Between July 1st 2003 and December 31st 2006, a mutual insurance fund for state employees (Mutuelle générale de l'équipement et des territoires) offered existing holders of its supplementary cover ('MGET basic') an additional health coverage ('MGET+'). This particular context, where individuals covered from the same supplementary health insurance decide to pu...

The Development of the Irish Private Health Insurance Market and Evidence of Selection Effects Therein

2008

This paper tracks the development of the Irish private health insurance market, both in terms of its legislative background and the development of competition. Literature on adverse selection and risk selection is then reviewed. Data from two surveys of consumers are then analysed to determine whether evidence exists of adverse selection or risk selection in the Irish private health insurance market. Both of these issues are relevant in the context of the debate over risk equalisation in the market in Ireland.