The effect of health on acute care supplemental insurance ownership: An empirical analysis

Amir Shmueli*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

The empirical effect of health status on private insurance ownership is a mixture of the effect of health on the demand for insurance (subjected to adverse selection) and its effect on the insurer's underwriting practice (subjected to risk-selection). Using bivariate partial observability probit models, this paper provides an empirical identification of health effects on the probability of application and on the probability of rejection in the Israeli market for acute care supplemental health insurance. The analysis shows that while the reduced-form health effect on ownership is negligible, the structural effects are sizeable and indicate that sicker individuals are more likely to apply, but are also more likely to be rejected. The policy implications of the above findings are discussed in the context of the Israeli health system.

Original languageEnglish
Pages (from-to)341-350
Number of pages10
JournalHealth Economics (United Kingdom)
Volume10
Issue number4
DOIs
StatePublished - 2001

Keywords

  • Adverse selection
  • Health effect
  • Risk-selection
  • Supplemental health insurance

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