German Long-Term Health Insurance: Theory Meets Evidence

83 Pages Posted: 23 Mar 2020 Last revised: 20 May 2023

See all articles by Juan Pablo Atal

Juan Pablo Atal

University of Pennsylvania

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Martin Karlsson

University of Duisburg-Essen - CINCH

Nicolas R. Ziebarth

Cornell University

Multiple version iconThere are 3 versions of this paper

Date Written: March 2020

Abstract

By insuring policyholders against contemporaneous health expenditure shocks and future reclassification risk, long-term health insurance contracts are a viable alternative to community-rated short-term contracts with an individual mandate. German long-term health insurance (GLTHI) is the largest market for private long-term health insurance contracts in the world. It features a simple design with initial risk-rating followed by guaranteed-renewable constant premiums over the lifecycle. We estimate the key ingredients of a life-cycle model to assess the welfare effects of the GLTHI contract and compare them to the optimal contract. This comparison provides further lessons about the trade-offs of long-term health insurance design.

Suggested Citation

Atal, Juan Pablo and Fang, Hanming and Karlsson, Martin and Ziebarth, Nicolas R., German Long-Term Health Insurance: Theory Meets Evidence (March 2020). NBER Working Paper No. w26870, Available at SSRN: https://ssrn.com/abstract=3559159

Juan Pablo Atal (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Hanming Fang

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Martin Karlsson

University of Duisburg-Essen - CINCH ( email )

Universit├Ątsstra├če 2
Essen, 45141
Germany

Nicolas R. Ziebarth

Cornell University ( email )

Ithaca, NY
United States

HOME PAGE: http://www.human.cornell.edu/bio.cfm?netid=nrz2

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
6
Abstract Views
341
PlumX Metrics