Price Elasticities and Social Health Insurance Choice in Germany: A Dynamic Panel Data Approach

26 Pages Posted: 24 Aug 2005

See all articles by Stefan Gress

Stefan Gress

University of Applied Sciences Fulda

Marcus Tamm

RWI

Harald Tauchmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Jürgen Wasem

University of Duisburg-Essen

Date Written: June 2005

Abstract

In 1996 free choice of health insurers has been introduced in the German social health insurance scheme. Competition between insurers was supposed to increase efficiency. A crucial precondition for effective competition among health insurers is that consumers search for lower-priced health insurers. We test this hypothesis by estimating the price elasticities of insurers' market shares. We use unique panel data and specify a dynamic panel model to explain changes in market shares. Estimation results suggest that short-run price elasticities are smaller than previously found by other studies. In the long-run, however, estimation results suggest substantial price effects.

Keywords: Competition, generalized method of moments, health insurance

JEL Classification: I18, C33

Suggested Citation

Gress, Stefan and Tamm, Marcus and Tauchmann, Harald and Wasem, Jürgen, Price Elasticities and Social Health Insurance Choice in Germany: A Dynamic Panel Data Approach (June 2005). RWI Discussion Paper No. 28, Available at SSRN: https://ssrn.com/abstract=784567 or http://dx.doi.org/10.2139/ssrn.784567

Stefan Gress (Contact Author)

University of Applied Sciences Fulda ( email )

Germany

Marcus Tamm

RWI ( email )

Invalidenstr. 112
10115 Berlin
Germany
+49 30 202159818 (Phone)
+49 30 202159819 (Fax)

Harald Tauchmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Jürgen Wasem

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

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