Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2010-07-20 Number: 10-072/3 Author-Name: Jonneke Bolhaar Author-Workplace-Name: VU University Amsterdam, and Netspar Author-Name: Bas van der Klaauw Author-Workplace-Name: VU University Amsterdam, and CEPR Author-Name: Maarten Lindeboom Author-Workplace-Name: VU University Amsterdam, and Netspar Title: Insurance Search and Switching Behavior Abstract: This discussion paper resulted in a publication in 'De Economist', 2015, 163, 25-60. This paper looks into the search behavior of consumers in the market for health insurance contracts. We consider the recent health insurance reform in The Netherlands, where a private-public mix of insurance provision was replaced by a system based on managed competition. Although all insurers offer the same basic package (determined by the government), there is substantial premium dispersion. We develop a simple consumer search model containing the main features of the Dutch health insurance system. This model provides us with a number of hypotheses, which we test using data from the Dutch Health Care Consumer Panel. The data confirm the standard predictions on consumer choice (i.e. there is adverse selection and a lower premium increases coverage). We also find that consumers with lower search costs are more likely to receive a group contract offer. This generates a situation of price discrimination where individuals without group contracts and higher search costs pay higher premiums and buy lower insurance coverage. Classification-JEL: I11, D83 Keywords: health insurance, consumer search behavior, Dutch health insurance reform File-Url: https://papers.tinbergen.nl/10072.pdf File-Format: application/pdf File-Size: 276112 bytes Handle: RePEc:tin:wpaper:20100072