Processes of adverse selection are generally considered as challenges to the viability of the solidarity that has been institutionalized in insurance schemes in the social domain. This article analyses to what extent the introduction of free choice in social policies might trigger processes of adverse selection in modern welfare states. Free choice not only concerns the choice between different providers or different types of services, but also creates possibilities to exit or partially exit social policies that previously were mandatory. Free choice in social policies might contribute to increasing responsiveness in service delivery. However, when the decisions to exit social policies are not distributed equally among the participants in social policy schemes but are related to participants' risk profiles, adverse selection might occur. The common response to the challenge of adverse selection is obligatory and universal participation in health insurance schemes, pension schemes and other social policies. The introduction of exit options as part of free choice strategies thus might threaten solidarity. Although the issue of free choice in social policies has received considerable scholarly attention, the introduction of exit options and its consequences have been analysed less extensively. This article sets out to fill this gap by exploring to what extent the introduction of free choice in modern welfare states has created exit options, and to what extent this triggers processes of adverse selection in health policies, unemployment policies and pension schemes in four European countries: the Netherlands, Spain, Sweden and the UK. © 2009 The Author(s). Journal Compilation

Adverse selection, Exit options, Health insurances, Pensions, Unemployment schemes,
Social Policy and Administration
Erasmus School of Social and Behavioural Sciences

Fenger, H.J.M. (2009). Challenging solidarity? An analysis of exit options in social policies. Social Policy and Administration, 43(6), 649–665. doi:10.1111/j.1467-9515.2009.00686.x