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Testing for Asymmetric Information in Private Health Insurance

Olivella, P; Vera-Hernandez, M; (2012) Testing for Asymmetric Information in Private Health Insurance. The Economic Journal 10.1111/j.1468-0297.2012.02520.x. (In press). Green open access

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We test for asymmetric information in the UK private health insurance (PHI) market. In contrast to earlier research that considers either a purely private system or one where private insurance is complementary to public insurance, PHI is substitutive of the public system in the UK. Using a theoretical model of competition among insurers incorporating this characteristic, we link the type of selection (adverse or propitious) with the existence of risk-related information asymmetries. Using the British Household Panel Survey, we find evidence that adverse selection is present in the PHI market, which leads us to conclude that such information asymmetries exist.

Title:Testing for Asymmetric Information in Private Health Insurance
Open access status:An open access version is available from UCL Discovery
Publisher version:http://dx.doi.org/10.1111/j.1468-0297.2012.02520.x
Keywords:Substitutive Public Insurance, National Health Service, Adverse Selection
UCL classification:UCL > School of Arts and Social Sciences > Faculty of Social and Historical Sciences > Economics

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