Do Health Plans Risk-Select? An Audit Study on Germany's Social Health Insurance
Posted: 4 Nov 2012
Date Written: 2012
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.
Keywords: health insurance, risk selection, risk adjustment, geographic variations, Germany
JEL Classification: H5, I18
Suggested Citation: Suggested Citation