Bonus Options in Health Insurance

Confronted with the continuing cost expansion in the health care sector, policy makers face a dilemma: limiting moral hazard in medical care requires that consumers participate in the cost, yet copayment is strongly resisted by today's socially insured. Thus, the experiences of three private German health insurers will be of interest to physicians, social scientists, and policy makers. Insurer A writes conventional plans with deductibles and coinsurance; B pays back three-monthly premiums as a fixed rebate for no claims; while C runs an experience-rated bonus system starting with a rebate of three-monthly premiums for the first year without a claim, reaching a maximum of five after three years. While both rebates and bonuses are quite popular among insureds, this study shows that bonus options are particularly effective in limiting the demand for ambulatory and even hospital care. But what about adverse effects on health caused by the desire to save one's bonus? On this issue, there is some surprising evidence.

1. Overview and key statements of the study.- 2. Institutional framework, issues, and results.- 3. Health insurance options from the point of view of the consumer.- 4. Insurer A: Traditional cost sharing.- 5. Insurer B: Fixed rebates for no claims.- 6. Self-selection of risks with insurers A and B?.- 7. Insurer C: The dynamic bonus system.- 8. First-dollar coverage, fixed rebate, and dynamic bonus compared.- 9. Bonus options in social health insurance?.- Appendix A. Tables.- A. 1. Characterization of data base.- A.2. Dependent variables and means (1982), insurer A.- A.3. Explanatory variables and means (1982), insurer A.- A.4. Dependent variables and means (1982), insurer B.- A.5. Explanatory variables and means (1982), insurer B.- A.6. Dependent variables, merged sample.- A.7. Explanatory variables and means, subsamples and merged sample.- Appendix B. Sample construction and choice of statistical method.- B.1. Overview of plans written by insurers A, B, and C.- B.2. Representativeness and comparability of samples.- B.3. Methodological issues in empirical analysis.- B.3.1. Neutralizing the decision to submit.- B.3.2. Choice of statistical method.- B.3.3. Description of explanatory variables.- References.- Index of names.- Index of subjects.