Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76368
Authors: 
Meier, Volker
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 862
Abstract: 
In long-term private health insurance contracts, aging provisions are used to flatten premium profiles. An individual would like to change insurers if she perceives a low service quality. The first-best optimum is characterized by provision transfers which are higher for high risks and may be negative for low risks. Should the actual risk status not be verifiable, provision transfers have to be uniform. Efficient transfers will equalize consumption across periods and states if high risks are deterred from switching. Otherwise, the optimum transfer balances the distortions of incentives for high-risk and low-risk individuals.
Subjects: 
health insurance
multi-period contracts
competition
aging provisions
Document Type: 
Working Paper

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