Market incentives, plan choice, and price increases.
The Federal Employees Health Benefits Program (FEHBP) has attracted considerable interest for its ability to control health care costs. We examine the impact of the FEHBP's maximum dollar contribution on incentives to select low-cost plans and the growth in insurance premiums over time. Unless the maximum dollar contribution is pegged to a low-price plan, few enrollees select such plans. Moreover, premiums rise at least five percentage points per year faster among plans below this fixed subsidy level than they do in plans above it. Our results have important implications for the design of similar market-based approaches.
Thorpe
K E
KE
Department of Health Policy and Management, Rollins School of Public Health, Emory University, Atlanta, USA.
Florence
C S
CS
Gray
B
B
D002755:Choice Behavior; D017047:Cost Sharing; D005249:Fees and Charges; D006076:Government; D006264:Health Benefit Plans, Employee / Q000458:organization & administration*; D006801:Humans; D019458:Insurance Coverage / Q000458:organization & administration*; D008329:Managed Care Programs / Q000458:organization & administration*; D008389:Marketing of Health Services / Q000458:organization & administration*; D012052:Reimbursement, Incentive / Q000458:organization & administration*; D014481:United States