Consumer price sensitivity and health plan choice in a regulated competition setting

Bischof, Tamara; Schmid, Christian Philipp (2018). Consumer price sensitivity and health plan choice in a regulated competition setting. Health economics, 27(9), pp. 1366-1379. Wiley 10.1002/hec.3777

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We estimate premium elasticities in a regulated competition market based on a quasi‐exogenous premium increase for young adults in Switzerland. We exploit that individuals born before the turn of the year (“treatment group”) face a larger increase in premiums than individuals born after the turn of the year (“control group”). We find that the treatment group is 1.5 times more likely to switch their health plan than the control group. Overall, individuals respond to premium increases by choosing more frequently health plans with managed care features, increasing the deductible, and by switching the insurer. Regarding health plan choice, we find an average elasticity of −0.56 with regard to the relative premium difference of any plan to the status quo contract. The elasticity is up to 5 times larger for the treated (−1.03) than for the controls (−0.19). Our results are not driven by health status as measured by health care expenditures and chronic conditions. Rather, our findings suggest that the difference in the premium elasticity is driven by the salience of the premium increase. We argue that this finding is of high relevance for health care policies that aim at fostering health plan competition.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Bischof, Tamara and Schmid, Christian Philipp

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1057-9230

Publisher:

Wiley

Language:

English

Submitter:

Dino Collalti

Date Deposited:

24 Jun 2019 11:51

Last Modified:

12 Nov 2019 15:48

Publisher DOI:

10.1002/hec.3777

BORIS DOI:

10.7892/boris.127484

URI:

https://boris.unibe.ch/id/eprint/127484

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