Sources of Advantageous Selection: Evidence from the Medigap Insurance Market

TitleSources of Advantageous Selection: Evidence from the Medigap Insurance Market
Publication TypeJournal Article
Year of Publication2008
AuthorsFang, H, Keane, MP, Silverman, DS
JournalJournal of Political Economy
Volume116
Issue2
Pagination303-50
Call Numbernewpubs20081014_jpeversion.pdf
KeywordsMedicare/Medicaid/Health Insurance
Abstract

We provide evidence of advantageous selection in the Medigap insurance market and analyze its sources. Conditional on controls for Medigap prices, those with Medigap spend, on average, 4,000 less on medical care than those without. But if we condition on health, those with Medigap spend 2,000 more. The sources of this advantageous selection include income, education, longevity expectations, and financial planning horizons, as well as cognitive ability. Conditional on all these factors, those with higher expected medical expenditures are more likely to purchase Medigap. Risk preferences do not appear as a source of advantageous selection; cognitive ability is particularly important.

Notes

http://www.econ.duke.edu/ hf14/publication/advant/jpeversion.pdf

Endnote Keywords

Medicare/Health Insurance

Endnote ID

19430

Citation Key7250