Transferable Ageing Provisions in Individual Health Insurance Contracts

Abstract

We consider lifetime health insurance contracts in which ageing provisions are used to smooth the premium profile. The capital stock accumulated for each individual can be decomposed into two parts: a premium insurance and an annuitised life insurance, only the latter being transferable between insurers without triggering premium changes through risk segmentation. In a simulation based on German data, the transferable share declines in age and falls with an increasing age of entry into the contract. In spite of different benefit profiles, it is almost identical for women and men.JEL Code: D91, G22, I18.

International Portability of Health-Cost Cover: Mobility, Insurance, and Redistribution

“…This means that differences between countries are mainly driven by the cost differentials which already show up in Figure 1. Portability arrangements will have to deal with such differences -for young people who migrate to a developed, high-cost country and probably also for retirees returning home to a less developed, low-cost country -, while differences between individuals in good health or poor health contribute to the complications 3 Specifically, we rely on analyses of these data provided in Herring and Pauly (2006) and on procedures which are described in much detail in Baumann et al (2008). To obtain a clear distinction of risk categories, we adjust the definition of two risk classes suggested by Herring and Pauly (2006) who consider being a "high risk" as a transitory phenomenon.…”

“…There are a limited number of reviews of the legal framework for access to health care in foreign countries (see, e.g., Sieveking 2007, Pieters andSchoukens 2009) and of potential repercussions of cross-border utilization of health services on national health systems (see, e.g., Sieveking 2000, Eichenhofer 2002, or Schulte 2003. In addition, there is some amount of economic literature on portability in the context of "internal" mobility, i.e., with respect to switches between insurance providers within countries, which also bears some lessons for our theme (see Dowd and Feldman 1992, Pauly et al 1999, or Gruber and Madrian 2002 for the US system of employer-sponsored private insurance; Meier 2005, or Baumann et al 2008 for substitutional private health insurance in Germany). To the best of our knowledge, however, practical arrangements for international portability of health-cost cover have never been analyzed regarding their appropriateness or even optimality.…”

“…German private health-insurance contracts with "substitutional" cover appear to be the only major exemption (see Baumann et al 2008 for further details).…”

Who is Changing Health Insurance Coverage? Empirical Evidence on Policyholder Dynamics

“…First, most people experience worsening health as they age; therefore, a new policy will likely include a higher risk charge and therefore higher premiums. Second, the accumulated reserves generated from overcharging policyholders in the early years of the contract in order to undercharge them in later years and maintain a level premium are forfeited (Baumann, Meier, and Werding, ). Tariff switch, however, may allow policyholders to avoid being reclassified for underwriting purposes while also allowing them to maintain the accumulated reserves.…”

Wettbewerb in kapitalgedeckten Krankenversicherungssystemen: Ein risikogerechter Ansatz zur Übertragung von Alterungsrückstellungen in der Privaten Krankenversicherung

“…z.B. Meyer (1992),Cochrane (1995),Kifmann (2002),Baumann et al (2004). Verein für Socialpolitik und Blackwell Publishing Ltd. kollektive Prämienrisiko ist nichtüber die Gesamtalterungsrückstellung abgedeckt und muss erst von den Versicherungsnehmern getragen werden, nachdem es kostenwirksam geworden ist.…”