The Effect of Benefits, Premiums, and Heath Risk on Health Plan Choice in the Medicare Program

Department of Health Policy and Management, Emory University, Atlanta, GA 30322, USA.
Health Services Research (Impact Factor: 2.78). 09/2004; 39(4 Pt 1):847-64. DOI: 10.1111/j.1475-6773.2004.00261.x
Source: PubMed


To estimate the effect of Medicare+Choice (M+C) plan premiums and benefits and individual beneficiary characteristics on the probability of enrollment in a Medicare+Choice plan.
Individual data from the Medicare Current Beneficiary Survey were combined with plan-level data from Medicare Compare.
Health plan choices, including the Medicare+Choice/Fee-for-Service decision and the choice of plan within the M+C sector, were modeled using limited information maximum likelihood nested logit.
Premiums have a significant effect on plan selection, with an estimated out-of-pocket premium elasticity of -0.134 and an insurer-perspective elasticity of -4.57. Beneficiaries are responsive to plan characteristics, with prescription drug benefits having the largest marginal effect. Sicker beneficiaries were more likely to choose plans with drug benefits and diabetics were more likely to pick plans with vision coverage.
Plan characteristics significantly impact beneficiaries' decisions to enroll in Medicare M+C plans and individuals sort themselves systematically into plans based on individual characteristics.

Download full-text


Available from: Adam J Atherly
  • Source
    • "choice 4 (e.g. Strombom et al., 2002; Atherly et al., 2004; Schut and Hassink, 2002; Buchmueller, 2006; Tamm et al., 2007; Frank and Lamiraud, 2009; Buchmueller et al., 2013; Schmitz and Ziebarth, 2011; Wuppermann et al., 2014 "
    [Show abstract] [Hide abstract]
    ABSTRACT: This paper empirically assesses the relative role of health plan prices, service quality and optional benefits in the decision to choose a health plan. We link representative German SOEP panel data from 2007 to 2010 to (i) health plan service quality indicators, (ii) measures of voluntary benefit provision on top of federally mandated benefits, and (iii) health plan prices for almost all German health plans. Mixed logit models incorporate a total of 1,700 health plan choices with more than 50 choice sets for each individual. The findings suggest that, compared to prices, health plan service quality and supplemental benefits play a minor role in making a health plan choice.
    Full-text · Conference Paper · Feb 2015
  • Source
    • "In another study using UC employees, Strombom et al. (2002) calculate " insurer perspective own-price elasticities " of health plans and find that a monthly premium increase of $5 decreases the plans market share by between 1.2 and 3.7 percent. Atherly et al. (2004) study the Medicare+Choice market and calculate out-of pocket premium elasticities of -0.134 and insurer perspective elasticities of -4.6. Buchmueller (2006) focus on a sample of retirees 60 and calculates out-of-pocket premium elasticities of between -0.2 and -0.3, implying that a health plan would loose 4 to 8 percent of its enrollees it if increases monthly contributions by $10. "
    [Show abstract] [Hide abstract]
    ABSTRACT: This paper provides field evidence on (a) how price framing affects consumers’ decision to switch health insurance plans and (b) how the price elasticity of demand for health insurance can be influenced by policymakers through simple regulatory efforts. In 2009, in order to foster competition among health insurance companies, German federal regulation required health insurance companies to express price differences between health plans in absolute Euro values rather than percentage point payroll tax differences. Using individual level panel data, as well as aggregated health plan-level panel data, we find that the reform led to a sixfold increase in an individual’s switching probability and a threefold demand elasticity increase.
    Full-text · Article · Aug 2013 · SSRN Electronic Journal
  • Source
    • "The same has been found for those switching from less generous HMOs to non-HMO private managed care in the U.S. [42]. Generous benefit packages are widely associated with switching among the U.S. elderly [4]. "
    [Show abstract] [Hide abstract]
    ABSTRACT: The study is designed to provide an informal summary of what is known about consumer switching of health insurance plans and to contribute to knowledge about what motivates consumers who choose to switch health plans. Do consumers switch plans largely on the basis of critical reflection and assessment of information about the quality, and price? The literature suggests that switching is complicated, not always possible, and often overwhelming to consumers. Price does not always determine choice. Quality is very hard for consumers to understand. Results from a random sample survey (n = 2791) of the Alkmaar region of the Netherlands are reported here. They suggest that rather than embracing the opportunity to be active critical consumers, individuals are more likely to avoid this role by handing this activity off to a group purchasing organization. There is little evidence that consumers switch plans on the basis of critical reflection and assessment of information about quality and price. The new data reported here confirm the importance of a group purchasing organizations. In a free-market-health insurance system confidence in purchasing groups may be more important for health insurance choice than health informatics. This is not what policy makers expected and might result a less efficient health insurance market system.
    Full-text · Article · Dec 2011 · Health Care Analysis
Show more