The demand for health insurance and behavioural economics

Winssen, K. P. M. van; Kleef, Richard C. van; Ven, Wynand P.M.M. van de

doi:10.1007/s10198-016-0776-3

Cited by 14 publications

(7 citation statements)

References 20 publications

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“…In addition, CBHI member and nonmember households have a statistically different pattern on the loss-aversion bias test. These results are consistent with the findings of Van Winssen et al [24], which showed that the presence of loss aversion bias decreases the demand for Dutch supplementary health insurance. In addition, the results are consistent with Rice [22] which indicated the negative relationship between loss aversion bias and health insurance purchasing.…”

Section: Discussionsupporting

confidence: 93%

Community-Based Health Insurance Enrollment and Determinants in Addis Ababa: Insights from Behavioral Economics and Discrete Choice Experiments

Eshetu¹,

Seyoum²

2019

HEP

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Community-based health insurance target those employed in the rural and informal sector in urban by pooling risks and protect households from out-of-pocket expenditures when receiving health facility services. However, Ethiopian community-based health insurance is schemes characterized by low enrollment. The aim of this study is to analyze the determinants of community-based health insurance enrollment in Addis Ababa from behavioral economics and discrete choice experiment insights. A total of 222 households from ten pilot woredas were selected for the study using a simple random sampling technique. A simple social experiment is used to examine the significance of behavioral biases. A discrete choice experiment conducted across three attributes and conditional logit model used to determine the relative importance of the selected attributes and willingness-to-pay for those attributes. In addition, the binary logit regression model is used to estimate the probability of households enrollment in community-based health insurance. The study result indicates that households have the highest willingness to pay for only private health service providers (Birr 1849.6/year) compared to status-quo level. Nonmember households' willingness to pay for comprehensive health service package Birr 2271.7/year. Moreover, this study revealed loss-aversion bias, over-optimistic bias, and herding bias had significantly affected the household decision on community-based health insurance enrollment. The study suggests that behavioral biases affect Community-based health insurance enrollment. The study finding also reveals that respondent households are willingness to pay more for comprehensive health service package and for health insurance scheme that includes private health service providers. In addition, the study concludes eligible household enrollment decision varied based on their socio-demographic and household characteristic. This study recommends the need to consider mandatory community-based health insurance schemes and apply targeting intervention (coverage) to the particular group.

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Section: Discussionsupporting

confidence: 93%

Community-Based Health Insurance Enrollment and Determinants in Addis Ababa: Insights from Behavioral Economics and Discrete Choice Experiments

Eshetu¹,

Seyoum²

2019

HEP

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“…Thirdly, insurers could change the design of the supplementary health insurance altogether in an attempt to counteract adverse selection. Previous research has shown that the design of the Dutch supplementary health insurance is far from optimal, since it only provides a limited reduction of financial uncertainty and provides access to already affordable healthcare services [ 42 ]. In an attempt to provide a larger welfare gain to the insured from purchasing supplementary health insurance, the design of supplementary insurance could be adjusted in a way that it does (a) provide protection against unpredictable and large financial losses (e.g., dental care after an accident), (b) has first-euro cost-sharing with an individual cap on out-of-pocket expenses (i.e., in order to reduce moral hazard and protect insured from out-of-pocket expenses they cannot afford), and (c) provides the option to save for predictable small losses such as dental check-ups (i.e., in order to make sure that insured have enough money available for these healthcare services and are not limited by liquidity constraints).…”

Section: Discussionmentioning

confidence: 99%

Can premium differentiation counteract adverse selection in the Dutch supplementary health insurance? A simulation study

2017

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Most health insurers in the Netherlands apply community-rating and open enrolment for supplementary health insurance, although it is offered at a free market. Theoretically, this should result in adverse selection. There are four indications that adverse selection indeed has started to occur on the Dutch supplementary insurance market. The goal of this paper is to analyze whether premium differentiation would be able to counteract adverse selection. We do this by simulating the uptake and premium development of supplementary insurance over 25 years using data on healthcare expenses and background characteristics from 110,261 insured. For the simulation of adverse selection, it is assumed that only insured for whom supplementary insurance is expected not to be beneficial will consider opting out of the insurance. Therefore, we calculate for each insured the financial profitability (by making assumptions about the consumer’s expected claims and the premium set by the insurer), the individual’s risk attitude and the probability to opt out or opt in. The simulation results show that adverse selection might result in a substantial decline in insurance uptake. Additionally, the simulations show that if insurers were to differentiate their premium to 28 age and gender groups, adverse selection could be modestly counteracted. Finally, this paper shows that if insurers would apply highly refined risk-rating, adverse selection for this type of supplementary insurance could be counteracted completely.

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“…Van Winssen et al [ 6 ] explored potential explanations of why individuals choose suboptimal complementary health insurance. Based on key insights from behavioral economics, they discuss several factors that can have an impact on the high uptake of suboptimal insurance by consumers.…”

Section: Why Is Dental Insurance Suboptimal?mentioning

confidence: 99%