The Effect of a Ban on Gender-Based Pricing on Risk Selection in the German Health Insurance Market

61 Pages Posted: 22 Feb 2019

See all articles by Shan Huang

Shan Huang

Shanghai Jiao Tong University (SJTU) - Tong Ren Hospital

Martin Salm

Tilburg University; IZA Institute of Labor Economics

Date Written: January 29, 2019

Abstract

Starting from December 2012, insurers in the European Union were prohibited from charging gender-discriminatory prices. We examine the effect of this unisex mandate on risk segmentation in the German health insurance market. While gender used to be a pricing factor in Germany's private health insurance (PHI) sector, it was never used as a pricing factor in the social health insurance (SHI) sector. The unisex mandate makes PHI relatively more attractive for women and less attractive for men. Based on data from the SOEP we analyze how the unisex mandate affects the difference between women and men in switching rates between SHI and PHI. We find that the unisex mandate increases the probability of switching from SHI to PHI for women relative to men. This effect is strongest for self-employed individuals and mini-jobbers. On the other hand, the unisex mandate had no effect on the gender difference in switching rates from PHI to SHI. Because women have on average higher health care expenditures than men, our results imply a reduction of advantageous selection into PHI. Our results demonstrate that regulatory measures such as the unisex mandate can reduce risk selection between public and private health insurance sectors.

Keywords: unisex mandate, public and private health insurance, risk selection, Germany

JEL Classification: I13, D82, H51

Suggested Citation

Huang, Shan and Salm, Martin, The Effect of a Ban on Gender-Based Pricing on Risk Selection in the German Health Insurance Market (January 29, 2019). DIW Berlin Discussion Paper No. 1787 (January, 2019), Available at SSRN: https://ssrn.com/abstract=3339196 or http://dx.doi.org/10.2139/ssrn.3339196

Shan Huang (Contact Author)

Shanghai Jiao Tong University (SJTU) - Tong Ren Hospital

China

Martin Salm

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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