Advantageous Selection In The Private Hospital Insurance Market In Europe: Evidence On The Role Of Education And Cognitive Ability

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Executive Summary

The author uses micro data from the Survey of Health, Ageing and Retirement in Europe to study whether the cost of acquiring health information is an important determinant of the decision to buy private hospital health insurance for individuals aged 50+, in eight European countries. The author first tests whether, conditional on health insurance companies' risk assessments, individuals have residual private information on insurance determinants other than their risk type. The results show that there are individual characteristics, not observed by the insurers, that are positively correlated with hospital insurance coverage and negatively correlated with the ex post probability of requiring hospital treatment.

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