We test for asymmetric information in the UK private health insurance (PHI) market. In contrast to earlier research that considers either a purely private system or one where private insurance is complementary to public insurance, PHI is substitutive of the public system in the UK. Using a theoretical model of competition among insurers incorporating this characteristic, we link the type of selection (adverse or propitious) with the existence of risk-related information asymmetries. Using the British Household Panel Survey, we find evidence that adverse selection is present in the PHI market, which leads us to conclude that such information asymmetries exist.
Authors
![Marcos Vera Hernandez](/sites/default/files/styles/square_desktop/public/2022-06/Marcos_Vera_Hernandez.jpg?itok=TC0EwY1c)
Research Fellow University College London
Marcos is a Research Fellow at IFS, an Affiliate at the Rural Education Action Program and a Professor of Economics at the University College London.
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Pau Olivella
Journal article details
- DOI
- 10.1111/j.1468-0297.2012.02520.x
- Publisher
- Wiley
- ISSN
- 1468-0297
- Issue
- March 2013
Suggested citation
Olivella, P and Vera-Hernandez, M. (2013). 'Testing for Asymmetric information in Private Health Insurance' (2013)
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