ABSTRACT We investigate risk selection between public and private health insurance in Germany. With risk‐rated premiums in the private system and community‐rated premiums in the public system, advantageous selection in favor of private insurers is expected. Using 2000 to 2007 data from the...

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. Due to their low...