Working Paper: NBER ID: w23468
Authors: Juan Pablo Atal; Hanming Fang; Martin Karlsson; Nicolas R. Ziebarth
Abstract: We study theoretically and empirically how consumers in an individual private long-term health insurance market with front-loaded contracts respond to newly mandated portability requirements of their old-age provisions. To foster competition, effective 2009, German legislature made the portability of standardized old-age provisions mandatory. Our theoretical model predicts that the portability reform will increase internal plan switching. However, under plausible assumptions, it will not increase external insurer switching. Moreover, the portability reform will enable unhealthier enrollees to reoptimize their plans. We find confirmatory evidence for the theoretical predictions using claims panel data from a big private insurer.
Keywords: health insurance; portability reform; consumer behavior; Germany
JEL Codes: G22; I11; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Portability reform (J62) | Increase in internal switching (O33) |
| Portability reform (J62) | External switching rates remain roughly constant (F33) |
| Internal switchers (Y90) | Worse health than prior (I19) |
| External switchers (Y90) | Worse health than prior (I19) |
| Internal switchers (Y90) | Less healthy than external switchers (I12) |