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
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.
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)
More from IFS
Understand this issue
Public investment: what you need to know
25 April 2024
The £600 billion problem awaiting the next government
25 April 2024
If you can’t see it, you can’t be it: role models influence female junior doctors’ choice of medical specialty
24 April 2024
Policy analysis
The past and future of UK health spending
14 May 2024
NHS spending has risen less quickly than was planned at the last election, despite the pandemic and record waiting lists
14 May 2024
4.2 million working-age people now claiming health-related benefits, could rise by 30% by the end of the decade
19 April 2024
Academic research
The role of hospital networks in individual mortality
13 May 2024
6th World Bank/IFS/ODI Public Finance Conference | Driving Progress: Public Finance and Structural Transformation
Forced displacement, mental health, and child development: Evidence from Rohingya refugees
10 May 2024