Do Health Plans Risk-Select? An Audit Study on Germany's Social Health Insurance

Posted: 4 Nov 2012

Date Written: 2012

Abstract

This paper evaluates whether health plans in Germany's Social Health Insurance select on an easily observable predictor of risk: geography. To identify plan behavior separately from concurrent demand-side adverse selection, I implement a double-blind audit study in which plans are contacted by fictitious applicants from different locations. I find that plans are less likely to respond and follow-up with applicants from higher-cost regions, such as West Germany. The results suggest that supply-side selection may emerge even in heavily regulated insurance markets. The prospect of risk selection by firms has implications for studies of demand-side selection and regulatory policy in these settings.

Keywords: health insurance, risk selection, risk adjustment, geographic variations, Germany

JEL Classification: H5, I18

Suggested Citation

Bauhoff, Sebastian, Do Health Plans Risk-Select? An Audit Study on Germany's Social Health Insurance (2012). Journal of Public Economics, Vol. 96, No. 9-10, 2012. Available at SSRN: https://ssrn.com/abstract=2170664

Sebastian Bauhoff (Contact Author)

Center for Global Development ( email )

2055 L Street NW
Washington, DC DC 20009
United States

HOME PAGE: http://scholar.harvard.edu/bauhoff/

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