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

Citation:

Bauhoff, Sebastian. 2012. “Do Health Plans Risk-Select? An Audit Study on Germany’s Social Health Insurance.” Journal of Public Economics 96 (9-10): 750–759. Copy at https://tinyurl.com/y6ygebmb
Prepublication draft488 KB

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.

Published paper (gated)

Last updated on 09/06/2012