Managed competition and consumer price sensitivity in social health insurance.
This paper examines whether the introduction of managed competition in Dutch social health insurance has resulted in effective price competition among insurance funds. We find evidence of limited price competition, which may be caused by low consumer price sensitivity. Using aggregate panel data from all insurance funds over the period 1996-1998, estimated premium elasticities of market share are -0.3 for compulsory coverage and -0.8 for supplementary coverage. These elasticities are much smaller than in managed competition settings in US group insurance. This may be explained by differences in switching experience and higher search costs associated with individual insurance.
Schut
Frederik T
FT
Department of Health Policy and Management (iBMG), Erasmus University Rotterdam, Rotterdam, The Netherlands. schut@bmg.eur.nl
Hassink
Wolter H J
WH
D000206:Actuarial Analysis; D000328:Adult; D000368:Aged; D003258:Consumer Behavior / Q000191:economics* / Q000706:statistics & numerical data; D004465:Economic Competition; D005249:Fees and Charges / Q000706:statistics & numerical data* / Q000639:trends; D018166:Health Care Reform / Q000191:economics*; D019981:Health Care Sector; D006302:Health Services Research; D006801:Humans; D018854:Managed Competition / Q000191:economics* / Q000706:statistics & numerical data*; D008875:Middle Aged; D017059:Models, Econometric; D009313:National Health Programs / Q000191:economics*; D009426:Netherlands; D011907:Rate Setting and Review; D019472:Universal Health Insurance / Q000191:economics