Sources of advantageous selection: Evidence using actual health expenditure risk

Publisher:
Elsevier
Publication Type:
Journal Article
Citation:
Economics Letters, 2012, 116 (3), pp. 579 - 582
Issue Date:
2012-01
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In a market where insurers are not allowed to risk rate, we find evidence of advantageous selection using observed health expenditure risk. Selection is driven by income and optimism about the future. This may explain insurers' profitability, despite community rating.
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