Universität zu Köln

Pauly, Mark V., Menzel, Kai, Kunreuther, Howard and Hirth, Richard A. (2011). Guaranteed renewability uniquely prevents adverse selection in individual health insurance. J. Risk Uncertain., 43 (2). S. 127 - 140. DORDRECHT: SPRINGER. ISSN 0895-5646

Full text not available from this repository.

Abstract

New models of multi-period insurance show that health insurance buyers can be protected against changes in premiums from health shocks associated with chronic conditions by the addition of guaranteed renewability provisions. These models assume that a buyer's risk level in every time period is observed by all insurers. They also require a premium sequence that is front-loaded, which may be costly to buyers if capital markets are imperfect. We relax the common knowledge feature of the model by assuming that a person's risk in any time period is known only by that individual and the current insurer. One might suspect that a premium sequence with higher later period premiums would be incentive compatible because low risks will have less desirable offerings from alternative insurers. However, we show that generally, only the original premium schedule is incentive compatible, and attempts to alter front-loading will not be an equilibrium.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Pauly, Mark V. UNSPECIFIED UNSPECIFIED UNSPECIFIED Menzel, Kai UNSPECIFIED UNSPECIFIED UNSPECIFIED Kunreuther, Howard UNSPECIFIED UNSPECIFIED UNSPECIFIED Hirth, Richard A. UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-488711
DOI:	10.1007/s11166-011-9124-2
Journal or Publication Title:	J. Risk Uncertain.
Volume:	43
Number:	2
Page Range:	S. 127 - 140
Date:	2011
Publisher:	SPRINGER
Place of Publication:	DORDRECHT
ISSN:	0895-5646
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language MARKETS Multiple languages Business, Finance; Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/48871