Lifetime cover in private insurance markets

Brown, H. Shelton III and Connelly, Luke B. (2005) Lifetime cover in private insurance markets. International Journal of Health Care Finance and Economics, 5 1: 75-88. doi:10.1007/s10754-005-6602-6

Author Brown, H. Shelton III
Connelly, Luke B.
Title Lifetime cover in private insurance markets
Journal name International Journal of Health Care Finance and Economics   Check publisher's open access policy
ISSN 1389-6563
Publication date 2005-03
Sub-type Article (original research)
DOI 10.1007/s10754-005-6602-6
Volume 5
Issue 1
Start page 75
End page 88
Total pages 14
Editor M. Pauly
P. Zweifel
Place of publication New York, U.S.A.
Publisher Springer-Verlag New York
Collection year 2005
Language eng
Subject C1
340200 Applied Economics
720204 Industry policy
Abstract In the last few decades, private health insurance rates have declined in many countries. In countries and states with community rating, a major cause is adverse selection. In order to address age-based adverse selection, Australia has recently begun a novel approach which imposes stiff penalties for buying private insurance later in life, when expected costs are higher. In this paper, we analyze Australiarsquos Lifetime Cover in the context of a modified version of the Rothschild-Stiglitz insurance model (Rothschild and Stiglitz, 1976). We allow empirically-based probabilities to increase by age for low-risk types. The model highlights the shortcomings of the Australian plan. Based on empirically-based probabilities of illness, we predict that Lifetime Cover will not arrest adverse selection. The model has many policy implications for government regulation encouraging long-term health coverage.
Keyword health insurance
adverse selection
public policy
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
2006 Higher Education Research Data Collection
School of Medicine Publications
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Citation counts: Scopus Citation Count Cited 5 times in Scopus Article | Citations
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Created: Wed, 15 Aug 2007, 05:31:37 EST