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ABSTRACT: We use 4 years of data from the retiree health benefits program of the University of Michigan to estimate the effect of price on the health plan choices of Medicare beneficiaries. During the period of our analysis, changes in the University's premium contribution rules led to substantial price changes. A key feature of this 'natural experiment' is that individuals who had retired before a certain date were exempted from having to pay any premium contributions. This 'grandfathering' creates quasi-experimental variation that is ideal for estimating the effect of price. Using regression discontinuity methods, we compare the plan choices of individuals who retired just after the grandfathering cutoff date and were therefore exposed to significant price changes to the choices of a 'control group' of individuals who retired just before that date and therefore did not experience the price changes. The results indicate a statistically significant effect of price, with a $10 increase in monthly premium contributions leading to a 2 to 3 percentage point decrease in a plan's market share. Copyright © 2012 John Wiley & Sons, Ltd.
Health Economics 01/2012; · 2.12 Impact Factor
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ABSTRACT: We revisit the question of price elasticity of employer-sponsored insurance (ESI) take-up by directly examining changes in the take-up of ESI at a large firm in response to exogenous changes in employee premium contributions. We find that, on average, a 10% increase in the employee's out-of-pocket premium increases the probability of dropping coverage by approximately 1%. More importantly, we find heterogeneous impacts: married workers are much more price-sensitive than single employees, and lower-paid workers are disproportionately more likely to drop coverage than higher-paid workers. Elasticity estimates for employees below the 25th percentile of salary distribution in our sample are nearly twice the average.
Inquiry: a journal of medical care organization, provision and financing 01/2010; 47(1):33-47. · 0.83 Impact Factor
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ABSTRACT: While early growth in preferred provider organizations (PPOs) coincided with growth of managed care generally, recent expansion has come primarily at the expense of other managed care plans. Little is known about the micro behavior underlying these trends. In 2005, University of Michigan employees were offered PPOs for the first time by vendors who also offered other plans. PPOs helped the offering vendors maintain or increase their total enrollment share. PPOs were most attractive to workers who previously had chosen less managed plans. Because PPOs drew few enrollees from health maintenance organizations (HMOs), there was little evidence of a backlash against managed care in the context of the University of Michigan employee group.
Inquiry: a journal of medical care organization, provision and financing 44(4):400-11. · 0.83 Impact Factor
