The Role of Prices Relative to Supplemental Benefits and Service Quality in Health Plan Choice

35 Pages Posted: 11 May 2019

See all articles by Christian Bünnings

Christian Bünnings

University of Paderborn; RWI - Leibniz Institute for Economic Research

Hendrik Schmitz

University of Paderborn - Department of Economics

Harald Tauchmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Nicolas R. Ziebarth

Cornell University

Date Written: June 2019

Abstract

This article links representative enrollee panel data to health plan data on (1) prices, (2) service quality, and (3) nonessential benefits for the German statutory multipayer market and the years 2007–2010. We first show that although heavy federal regulation ensures a simple choice architecture, the majority of health plans are dominated—even when considering four nonprice attributes. Enrollees in dominated plans are older, less educated, and unhealthier. Second, we assess how switchers value prices relative to nonprice health plan attributes. Our mixed logit models incorporate a total of 1,700 health plan choices with each more than 50 choice sets. While prices are an important determinant for nearly everyone, 40 percent of all switchers do not seem to value service quality and supplemental benefits when choosing health plans.

Suggested Citation

Bünnings, Christian and Schmitz, Hendrik and Tauchmann, Harald and Ziebarth, Nicolas R., The Role of Prices Relative to Supplemental Benefits and Service Quality in Health Plan Choice (June 2019). Journal of Risk and Insurance, Vol. 86, Issue 2, pp. 415-449, 2019, Available at SSRN: https://ssrn.com/abstract=3385682 or http://dx.doi.org/10.1111/jori.12219

Christian Bünnings (Contact Author)

University of Paderborn ( email )

Warburger Str. 100
Paderborn, D-33098
Germany

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstraße 1-3
Essen
Germany

Hendrik Schmitz

University of Paderborn - Department of Economics ( email )

Warburger Str. 100
D-33098 Paderborn
Germany

Harald Tauchmann

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Nicolas R. Ziebarth

Cornell University ( email )

Ithaca, NY
United States

HOME PAGE: http://www.human.cornell.edu/bio.cfm?netid=nrz2

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