The Mandatory Health Insurance System in Chile: Explaining the Choice between Public and Private Insurance


In Chile, dependent workers and retirees are mandated by law to purchase health insurance, and can choose between private and public health insurance. This paper studies the determinants of the choice of health insurance. Earnings are generally considered the key factor in this choice, and we confirm this, but find that other factors are also important. It is particularly interesting to analyze how the individual's characteristics interact with the design of the system to influence choice. Worse health, as signaled by age or sex (e.g., older people or women in reproductive ages), results in adverse selection against the public health insurance system. This is due to the lack of risk adjustment of the public health insurance's premium. Hence, Chile's risk selection problem is, at least in part, due to the design of the Chilean public insurance system.

This is a preview of subscription content, log in to check access.


  1. Aedo, C. and C. Sapelli. (1999). “ El Sistema de Salud en Chile: Readecuar el Mandato y Reformar el Sistema de Seguros. ” Documento de Trabajo 293 (April), Centro de Estudios Públicos.

  2. Cameron, A. C. and P. K. Trivedi. (1991). “The Role of Income and Health Risk in the Choice of Health Insurance: Evidence from Australia” Journal of Public Economics 45, 1-28.

    Google Scholar 

  3. Díaz, C., R. Gazitúa, A. Torche and S. Valdés. (1996). “Cobertura de enfermedades catastróficas en el sistema Isapre. ” Research Paper of the Superintendency of Isapres.

  4. Fischer, R. (1998). “ ¿Cómo reformar el sistema de Isapre?” Revista Perspectivas, Centro de Economía Aplicada, DII, Universidad de Chile.

  5. Fischer, R. and P. Serra. (1996). “Análisis Económico del Sistema de Seguros de Salud en Chile. ” Revista de Análisis Económico 11 (2), 187-217.

    Google Scholar 

  6. Hopkins, S. and M. Kidd. (1996). “The Determinants of the Demand for Private Health Insurance Under Medicare. ” Applied Economics 28, 1623-1632.

    Google Scholar 

  7. Jaffee, D. and T. Russell. (1998). “The Causes and Consequences of Rate Regulation in the Auto Insurance Industry. ” In David Bradford (ed.), The Economics of Property Casualty Insurance. National Bureau of Economic Research.

  8. Maddala, G. S. (1983). Limited Dependent and Qualitative Variables in Econometrics. Cambridge University Press.

  9. Newhouse, J. (1993). Free for All?: Lessons from the RAND Health Insurance Experiment. Harvard University Press.

  10. Sapelli, C. and A. Torche. (1998). “ El Seguro Previsional de Salud: Determinantes de la Elección entre Seguro P00FA;blico y Privado, 1990-1994. ” Cuadernos de Economía (December).

  11. Sapelli, C. and B. Vial. (1998). “Utilizacion de Prestaciones de Salud en Chile: ¿Es Diferente Entre Grupos De Ingreso?” Cuadernos de Economía (December).

Download references

Author information



Rights and permissions

Reprints and Permissions

About this article

Cite this article

Sapelli, C., Torche, A. The Mandatory Health Insurance System in Chile: Explaining the Choice between Public and Private Insurance. International Journal of Health Care Finance and Economics 1, 97–110 (2001).

Download citation

  • mandated benefits
  • health insurance
  • adverse selection