Health Insurance Competition

The Effect of Group Contracts

J. Boone, R.C.M.H. Douven, C. Droge, I. Mosca

Research output: Book/ReportReportProfessional

Abstract

In countries like the US and the Netherlands health insurance is provided by private firms. These private firms can offer both individual and group contracts. The strategic and welfare implications of such group contracts are not well understood. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we estimate a model to determine which factors explain the price of group contracts. We find that groups that are located close to an insurers’ home turf pay a higher premium than other groups. This finding is not consistent with the bargaining argument in the literature as it implies that concentrated groups close to an insurer’s home turf should get (if any) a larger discount than other groups. A simple Hotelling model, however, does explain our empirical results.
Original languageEnglish
Place of PublicationThe Hague
PublisherCPB
Number of pages42
Publication statusPublished - 2010

Publication series

NameCPB Discussion Paper
No.152

Fingerprint

Health insurance
Insurer
Private firms
Empirical results
Hotelling model
Discount
Welfare implications
Factors
Insurance contract
Premium
The Netherlands

Keywords

  • health insurance
  • health-plan choice
  • managed competition

Cite this

Boone, J., Douven, R. C. M. H., Droge, C., & Mosca, I. (2010). Health Insurance Competition: The Effect of Group Contracts. (CPB Discussion Paper; No. 152). The Hague: CPB.
Boone, J. ; Douven, R.C.M.H. ; Droge, C. ; Mosca, I. / Health Insurance Competition : The Effect of Group Contracts. The Hague : CPB, 2010. 42 p. (CPB Discussion Paper; 152).
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Boone, J, Douven, RCMH, Droge, C & Mosca, I 2010, Health Insurance Competition: The Effect of Group Contracts. CPB Discussion Paper, no. 152, CPB, The Hague.

Health Insurance Competition : The Effect of Group Contracts. / Boone, J.; Douven, R.C.M.H.; Droge, C.; Mosca, I.

The Hague : CPB, 2010. 42 p. (CPB Discussion Paper; No. 152).

Research output: Book/ReportReportProfessional

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AU - Droge, C.

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N1 - Pagination: 42

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N2 - In countries like the US and the Netherlands health insurance is provided by private firms. These private firms can offer both individual and group contracts. The strategic and welfare implications of such group contracts are not well understood. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we estimate a model to determine which factors explain the price of group contracts. We find that groups that are located close to an insurers’ home turf pay a higher premium than other groups. This finding is not consistent with the bargaining argument in the literature as it implies that concentrated groups close to an insurer’s home turf should get (if any) a larger discount than other groups. A simple Hotelling model, however, does explain our empirical results.

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Boone J, Douven RCMH, Droge C, Mosca I. Health Insurance Competition: The Effect of Group Contracts. The Hague: CPB, 2010. 42 p. (CPB Discussion Paper; 152).