If premiums for health insurance are not risk related, there exists a consumer information surplus that may result in adverse selection. Our results indicate that insurers can greatly reduce this surplus by risk-adjusting the premium. We conclude that there need not be any substantial unavoidable consumer information surplus if consumers can choose whether to take a deductible for a one- or two-year health insurance contract with otherwise identical benefits. Therefore, adverse selection need not be a problem in a competitive insurance market with risk-adjusted premiums or vouchers and with such a consumer choice of health plan. © 1995.
CITATION STYLE
van de Ven, W. P. M. M., & van Vliet, R. C. J. A. (1995). Consumer information surplus and adverse selection in competitive health insurance markets: An empirical study. Journal of Health Economics, 14(2), 149–169. https://doi.org/10.1016/0167-6296(94)00043-4
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