The effect of price on switching among health plans.
A recent policy change by the University of California (UC) provides a unique natural experiment for investigating the sensitivity of consumers to health plan premiums. When the UC moved to a policy of limiting its contribution to the cost of the least expensive plan, out-of-pocket premiums increased for roughly one-third of UC employees. We examine the extent to which UC employees switched plans in response to this change in premiums. Our results indicate a strong response. Individuals facing premium increases of less than $10 were roughly 5 times as likely to switch plans as those whose premiums remained constant.
Buchmueller
T C
TC
Graduate School of Management, University of California, Irvine 92717, USA. tcbuchmu@uci.edu
Feldstein
P J
PJ
D002140:California; D002755:Choice Behavior; D003256:Community Participation / Q000191:economics*; D003669:Deductibles and Coinsurance; D004465:Economic Competition; D018588:Fee-for-Service Plans / Q000191:economics / Q000706:statistics & numerical data; D005249:Fees and Charges / Q000706:statistics & numerical data*; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000706:statistics & numerical data; D006279:Health Maintenance Organizations / Q000191:economics / Q000706:statistics & numerical data; D017059:Models, Econometric; D011243:Preferred Provider Organizations / Q000191:economics / Q000706:statistics & numerical data; D011907:Rate Setting and Review / Q000706:statistics & numerical data; D014495:Universities