Working Paper: CEPR ID: DP7871
Authors: Jan Boone; Rudy Douven; Carline Droge; Ilaria Mosca
Abstract: In countries like the US and the Netherlands health insurance is provided by private firms. These private firms can offer both individual and group contracts. The strategic and welfare implications of such group contracts are not well understood. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we estimate a model to determine which factors explain the price of group contracts. We find that groups that are located close to an insurers' home turf pay a higher premiumthan other groups. This finding is not consistent with the bargaining argument in the literature as it implies that concentrated groups close to an insurer's home turf should get (if any) a larger discount than other groups. A simple Hotelling model, however, does explain our empirical results.
Keywords: health insurance; health-plan choice; managed competition
JEL Codes: I11; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| group size (C92) | premiums (G22) |
| geographical proximity to insurer (G52) | premiums (G22) |
| number of nearby group contracts (L14) | individual contract prices (G13) |