انتخاب، رقابت قیمتی و پیچیدگی در بازارهای بیمه سلامت

The United States and other nations rely on consumer choice and price competition between competing health plans to allocate resources in the health sector. While a great deal of research has examined the efficiency consequences of adverse selection in health insurance markets, less attention has been devoted to other aspects of consumer choice. The nation of Switzerland offers a unique opportunity to study price competition in health insurance markets. Switzerland regulates health insurance markets with the aim of minimizing adverse selection and encouraging strong price competition. We examine consumer responses to price differences in local markets and the degree of price variation in local markets. Using both survey data and observations on local markets we obtain evidence suggesting that as the number of choices offered to individuals grows, their willingness to switch plans given a set of price dispersion differences declines, which allows large price differences for relatively homogeneous products to persist. We consider explanations for this phenomenon from economics and psychology.

The U.S. and other nations rely on consumer choice and price competition between competing health insurance plans to allocate resources in the health sector. Policy makers have an efficiency impulse to offer larger numbers of choices and greater variety of health insurance products. But expanded choices also carry efficiency problems for selecting a health plan, even if these additional choices also result in price competition (Cutler and Reber, 1998). Switzerland offers a unique opportunity to study price competition in health insurance markets. All residents are required to have health insurance. The government regulates the terms of competition, to encourage price competition and minimize adverse selection. They accomplish this by defining a standard benefit for the mandated individual coverage, prohibiting insurers from turning away potential enrollees, providing public information on prices, and risk-adjusting payments to insurers. Households face the full price of coverage and may also purchase supplementary coverage, and many do. Swiss residents all have a choice of at least 35 different sellers from which to purchase coverage. In principle, one might expect this set of market arrangements to lead to active price competition. Yet Swiss health insurance markets are characterized by large, persistent price differences in local markets and little switching by consumers to plans with better prices. This has been the case even when local health insurance markets offer more choice. These market outcomes contrast sharply with simple models of consumer behavior and competitive markets. We therefore explore several explanations for consumers’ health plan switching behavior. Specifically, we focus on the response of consumers to an expanding health insurance choice set, using panel data based on Swiss health insurance markets and a survey of insured individuals to explore switching behavior and consumer satisfaction with health insurance. The paper is organized into six sections. Following this introduction, Section 2 describes the market for health insurance in Switzerland and reports basic facts about the market with respect to the amount of choice, consumer mobility and price patterns. Section 3 explores explanations for the apparent disconnect between what one might expect based on the standard competitive model and the observed outcomes. Section 4 describes the empirical analysis aimed at producing evidence to assess the proposed explanations. We report results in Section 5 and our concluding remarks in Section 6.

In the Swiss market for health insurance, one might expect to find fierce price competition and active movement between health plans by consumers interested in securing the lowest prices for a standardized basic benefit package. Yet the data show persistently low rates of switching despite high variation in premiums. These facts present a challenge to simple market models of health insurance. Our findings offer a mixed picture of the impact of expanded choice on price competition in Swiss health insurance markets. Results from our various model specifications point to a consistent finding that more choice serves to inhibit switching of health plans. In one specification we allowed consumers to respond to fringe firms differently from those that were more significant players in the local market. There our results suggest that switching rates are driven largely by the number of fringe firms in the market. These results are consistent with the literature on 401(k) plans that shows substantial effects on participation as the choice set grows to over 30 funds. Our econometric results indicate that people with longer periods of attachment to a particular health plan were less likely to express an intention to switch plans. Moreover, people making new health plan choices (switchers, and those new to the market) chose to enroll in a different pattern of health plans from those who had not switched in some time. Survey respondents explicitly reported reasons related to habit, tradition and so on. All of these reasons are consistent with inertia associated with status quo bias. We uncovered some evidence suggesting that consumers sometimes make errors in choosing health plans. We showed that consumers who switch health plans pay 15 percent to 16 percent less in health insurance premiums per month than those that do not switch plans. We also showed that among consumers expressing dissatisfaction with their health plans, those in markets with fewer choices were more likely to express intent to switch. Finally, consumers who used an agent to help them purchase insurance consistently paid significantly lower premiums than those who made the purchase decision on their own. One implication of these results is that very large choice sets are likely to reduce the effectiveness of consumer decision-making. This weakens the relationship between enrollment and price and may result in larger markups by health insurers, who are less likely to offer price concessions when consumer decision is not price-driven (Perloff and Salop, 1985). Our findings suggest that simplifying health plan decision-making by reducing the size of the choice set might result in more price competition among insurers, and benefit consumers.In the Swiss market for health insurance, one might expect to find fierce price competition and active movement between health plans by consumers interested in securing the lowest prices for a standardized basic benefit package. Yet the data show persistently low rates of switching despite high variation in premiums. These facts present a challenge to simple market models of health insurance. Our findings offer a mixed picture of the impact of expanded choice on price competition in Swiss health insurance markets. Results from our various model specifications point to a consistent finding that more choice serves to inhibit switching of health plans. In one specification we allowed consumers to respond to fringe firms differently from those that were more significant players in the local market. There our results suggest that switching rates are driven largely by the number of fringe firms in the market. These results are consistent with the literature on 401(k) plans that shows substantial effects on participation as the choice set grows to over 30 funds. Our econometric results indicate that people with longer periods of attachment to a particular health plan were less likely to express an intention to switch plans. Moreover, people making new health plan choices (switchers, and those new to the market) chose to enroll in a different pattern of health plans from those who had not switched in some time. Survey respondents explicitly reported reasons related to habit, tradition and so on. All of these reasons are consistent with inertia associated with status quo bias. We uncovered some evidence suggesting that consumers sometimes make errors in choosing health plans. We showed that consumers who switch health plans pay 15 percent to 16 percent less in health insurance premiums per month than those that do not switch plans. We also showed that among consumers expressing dissatisfaction with their health plans, those in markets with fewer choices were more likely to express intent to switch. Finally, consumers who used an agent to help them purchase insurance consistently paid significantly lower premiums than those who made the purchase decision on their own. One implication of these results is that very large choice sets are likely to reduce the effectiveness of consumer decision-making. This weakens the relationship between enrollment and price and may result in larger markups by health insurers, who are less likely to offer price concessions when consumer decision is not price-driven (Perloff and Salop, 1985). Our findings suggest that simplifying health plan decision-making by reducing the size of the choice set might result in more price competition among insurers, and benefit consumers.