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No-claim refunds and healthcare use

Author

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  • Avdic, Daniel
  • Decker, Simon
  • Karlsson, Martin
  • Salm, Martin

Abstract

No-claim refunds are cost-control instruments which stipulate a payback agreement contingent on one or more claim-free years. We study how such no-claim refunds affect claiming behavior using claims data from a large German health insurer and a policy that increased the refund size for certain plans. We propose a method to decompose the effect on claims into behavioral and non-behavioral components, and show that individuals responded to the refund policy by reducing claims by eight percent on average. The effect persisted for several years; behavioral responses were stronger for clients with more to gain from the policy; and reductions in claims were not restricted to treatments of questionable medical value.

Suggested Citation

  • Avdic, Daniel & Decker, Simon & Karlsson, Martin & Salm, Martin, 2024. "No-claim refunds and healthcare use," Journal of Public Economics, Elsevier, vol. 230(C).
    • Handle: RePEc:eee:pubeco:v:230:y:2024:i:c:s0047272723002438
    DOI: 10.1016/j.jpubeco.2023.105061
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    More about this item

    Keywords

    No-claim refund; Moral hazard; Health insurance;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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