Pareto-improving Risk selection in Social Health Insurance

Peter Zweifel

Authors

Peter Zweifel

Keywords:

risk selection, social health insurance, pareto improvement

Abstract

Social health insurance traditionally imposes mandatory membership in a single pool in the aim of improving the welfare of high risks. However, this creates two problems, inefficiency of a monopolistic scheme and insufficient adaptation to individual preferences. Competition combined with a risk adjustment scheme can be used to improve efficiency. In the presence of preference heterogeneity, risk selection may improve adaptation to individual preferences, resulting in Pareto improvement over the pooling contract. This is shown to be possible both under perfect and imperfect risk adjustment.

Downloads

How to Cite

Pareto-improving Risk selection in Social Health Insurance. (2015). Global Journal of Management and Business Research, 15(35), 19-29. https://journalofbusiness.org/index.php/GJMBR/article/view/

Download Citation

References

Robin Boadway, Manuel Leite‐monteiro, Maurice Marchand, Pierre Pestieau (2006) Social Insurance and Redistribution with Moral Hazard and Adverse Selection*. 108(2), 279-298. https://doi.org/10.1111/j.1467-9442.2006.00446.x

Friedrich Breyer (1995) The political economy of rationing in social health insurance. 8(2), 137-148. https://doi.org/10.1007/bf00166648

Keith Crocker, Arthur Snow (1985) A Simple Tax Structure for Competitive Equilibrium and Redistribution in Insurance Markets with Asymmetric Information. 51(4), 1142. https://doi.org/10.2307/1058384

KJ Crocker, A. Snow (2013) The Theory of Risk Classification, in: G Dionne (ed.), Handbook of Insurance, 2nd. ed. 2, 281-313.

B. Dahlby (1981) Adverse selection and Pareto improvements through compulsory insurance. 37(3), 547-558. https://doi.org/10.1007/bf00133751

N. Doherty (1976) Some Fundamental Theorems of Risk Management. 42(3), 447. https://doi.org/10.2307/251700

E. Fehr, K. Schmidt (1999) A Theory of Fairness, Competition, and Cooperation. 114(3), 817-868. https://doi.org/10.1162/003355399556151

J. Glazer, T. McGuire (2014) Risk Adjustment as a Mechanism Design, in: A.J. Culyer (ed.). 3, 267-271. https://doi.org/10.1016/b978-0-12-375678-7.01307-9

A. Hirschman (1970) Exit, Voice, and Loyalty, Cambridge.

Olivia Mitchell, Stephen Zeldes (1995) "Social Security Privatization: A Structure for Analysis". 86(2), 363-367. https://doi.org/10.3386/w5512

W. Neudeck, K. Podczek (1996) Adverse selection and regulation in health insurance markets. 15(4), 387-408. https://doi.org/10.1016/s0167-6296(96)00488-2

JP Newhouse (1996) Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection. 34(3), 1236-1263.

J. Tinbergen (1952) On the Theory of Economic Policy, 2nd ed. 19.

Maria Trottmann, Peter Zweifel, Konstantin Beck (2011) Supply-side and demand-side cost sharing in deregulated social health insurance: Which is more effective?. 31(1), 231-242. https://doi.org/10.1016/j.jhealeco.2011.10.004

EM Van Barneveld, RCJA Van Vliet, WPMM Van de Ven (1988) Mandatory High-risk Pooling: An Approach to Reducing Incentives for Cream Skimming. 3(2), 133-143.

(2007) Risk adjustment and risk selection in Europe: 6 years later. 83(2-3), 162-179. https://doi.org/10.1016/j.healthpol.2006.12.004

WPPM Van de Ven, RP Ellis (2000) Risk Adjustment in Competitive Health Plan Markets, in Cuyer, AJ and JP Newhouse (eds.). 1.

Van Vliet, RCJA (2000) A Statistical Analysis of Mandatory Pooling Across Health Insurers. 67(June), 197-217.

Peter Zweifel (2013) The present state of health economics: a critique and an agenda for the future. 14(4), 569-571. https://doi.org/10.1007/s10198-012-0427-2

P. Zweifel (2013) The Division of Labor between Private and Social Insurance, in Dionne, G (ed.), Handbook of Insurance, 2nd. ed. 1097-1118.

Peter Zweifel, Michael Breuer (2006) The Case for Riskbased Premiums in Public Health Insurance, Health Economics. 1(2), 171-188. https://doi.org/10.1017/s1744133105001064

P. Zweifel, K. Leukert-Becker (2014) Preferences for Health Insurance in Germany and the Netherlands - A Tale of Two Countries. 4, 22.