Citation

Discussion Paper Details

Please find the details for DP8501 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Health Insurance without Single Crossing: why healthy people have high coverage

Author(s): Jan Boone and Christoph Schottmüller

Publication Date: August 2011

Keyword(s): health insurance, risk adjustment and single crossing

Programme Area(s): Industrial Organization

Abstract: Standard insurance models predict that people with high (health) risks have high insurance coverage. It is empirically documented that people with high income have lower health risks and are better insured. We show that income differences between risk types lead to a violation of single crossing in the standard insurance model. If insurers have some market power, this can explain the empirically observed outcome. This observation has also policy implications: While risk adjustment is traditionally viewed as an intervention which increases efficiency and raises the utility of low health agents, we show that with a violation of single crossing a trade off between efficiency and solidarity emerges.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8501

Bibliographic Reference

Boone, J and Schottmüller, C. 2011. 'Health Insurance without Single Crossing: why healthy people have high coverage'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8501