Health economics
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Recent contributions in auction and bargaining theory suggest that a procurer should place more faith in the power of competition among alternative suppliers than in his or her own negotiating skill. Based on data from 216 contracts between procurers and suppliers of medical and surgical articles, we test whether auctions and bargaining result in significantly different prices. The main results are that auctions give 'thicker' markets compared with negotiations, as expected, but that auctions do not result in significantly lower prices compared with negotiations.
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The German statutory health insurance market was exposed to competition in 1996. To limit direct risk selection the regulator required open enrollment. As the risk compensation scheme, introduced in 1994, is highly incomplete, substantial incentives for risk selection exist. ⋯ We analyze, using data from the German Socio-Economic Panel, the determinants of switching behavior from 1995 to 2000. There is no evidence for selection by funds. The success of the company-based sickness funds originates in incomplete risk adjustment together with the negative correlation between health status and switching costs.