Who Opts out of the Statutory Health Insurance? A Discrete Time Hazard Model for Germany.

The coexistence of social health insurance and private health insurance in Germany is subject to intense public debate. As only few have the opportunity to choose between the two systems, they are often regarded as privileged by the health insurance system. Applying a hazard model in discrete time, this paper examines the role of incentives set by the regulatory framework and the influence of individual personality characteristics on the decision to opt out of the statutory system. To address potential endogeneity of one of the key explanatory variables, an instrumental variable approach is also applied. The estimation results yield robust evidence on the choice of health insurance type that is consistent with pragmatic decision making, with both incentives set by regulation and personality traits as relevant determinants.