Selection and Plan Switching Behavior

Giving more detailed information about health insurance encourages consumers to choose compromise options

Introduction

To investigate how the provision of additional information about the health events and procedures covered by a healthcare plan affect the level of coverage chosen by young adults taking their first full time job.

Methods

University students were recruited for a study at two behavioral laboratories (one located at the University of Toronto and the other located at INSEAD-Sorbonne University in Paris) in which they imagine they are making choices about the healthcare coverage associated with the taking a new job in Chicago, Illinois. Every participant made choices in four categories: Physician Care, Clinical Care, Hospital Care, and Dental Care. Participants were randomly assigned to one of two conditions: Low Detail or High Detail coverage information and they chose between three levels of coverage: Basic, Enhanced, and Superior. The study took place in March 2017 with 120 students in Toronto and 121 students in Paris.

Results

The provision of more detailed information about the health events and procedures covered by a healthcare plan leads to a compromise effect in which participants shift their choices significantly towards Enhanced (moderate coverage) from Basic (low coverage) and Superior (high coverage). The compromise effect was observed at both locations; however, Paris participants choose significantly higher levels of coverage than Toronto participants.

Discussion

Providing more detail to employees about the health events and procedures covered by a healthcare plan will increase the fraction of employees who choose the intermediate level of coverage. It is beyond the scope of this study to conclude whether this is good or bad; however, in a context where employees gravitate to either insufficient or excessive coverage, providing additional detail may reduce these tendencies.

Subscriber continuity in health insurance plans: factors associated with re-enrollment and coverage changes

Aims: This study examined the extent to which Marketplace health insurance subscribers re-enroll a second year. Among re-enrollees, we sought to examine movement to more and less generous insurance plans (based on actuarial value), and the extent to which adverse selection, adverse retention, and aging in place are evident from re-enrollment choices made.Methods: Re-enrollment from 2015 to 2016 and 2016 to 2017 and movement to more and less generous insurance plans was examined using enrollment and insurance claims data from two US Federally-facilitated Marketplace insurance carriers operating in the state of New Mexico for 2015-2017. Insurance plans are assigned to metal levels based on estimated plan actuarial value: Bronze (60%), Silver (70%), and Gold (80%). Odds ratios (ORs) and 95% confidence intervals (OR CI) were estimated using logistic regressions for subscribers with base-year healthcare utilization. ORs were estimated for (1) re-enrollment in the year following the base year, and (2) movement to a higher or lower actuarial value plan.Results: Approximately 50% of subscribers re-enrolled with the same carrier for 2016 and 60% for 2017. Being enrolled 12 months was the strongest predictor for second year re-enrollment. Older individuals were more likely to re-enroll. Re-enrollment was lower for the insurance carrier with higher second year premium changes. Chronic condition utilization characteristics were positively associated with re-enrollment. Approximately 12% of Bronze subscribers moved to Silver or Gold, and had higher utilization after re-enrollment. Among Silver subscribers, 6% moved to Gold and 6% to Bronze. Approximately 37% of Gold subscribers moved to Silver or Bronze.Discussion: Re-enrollment was similar to published non-group insurance rates. Adverse selection and aging in place were observed. Evidence was weak for adverse retention. Some coverage change choices were rational, while others suggest subscribers may have difficulty making insurance choice decisions.

Asymmetric Information in Iranian's Health Insurance Market: Testing of Adverse Selection and Moral Hazard

BACKGROUND

Asymmetric information is one of the most important issues in insurance market which occurred due to inherent characteristics of one of the agents involved in insurance contracts; hence its management requires designing appropriate policies. This phenomenon can lead to the failure of insurance market via its two consequences, namely, adverse selection and moral hazard.

OBJECTIVE

This study was aimed to evaluate the status of asymmetric information in Iran's health insurance market with respect to the demand for outpatient services.

MATERIALS/PATIENTS AND METHODS

This research is a cross sectional study conducted on households living in Iran. The data of the research was extracted from the information on household's budget survey collected by the Statistical Center of Iran in 2012. In this study, the Generalized Method of Moment model was used and the status of adverse selection and moral hazard was evaluated through calculating the latent health status of individuals in each insurance category. To analyze the data, Excel, Eviews and stata11 software were used.

RESULTS

The estimation of parameters of the utility function of the demand for outpatient services (visit, medicine, and Para-clinical services) showed that households were more risk averse in the use of outpatient care than other goods and services. After estimating the health status of households based on their health insurance categories, the results showed that rural-insured people had the best health status and people with supplementary insurance had the worst health status. In addition, the comparison of the conditional distribution of latent health status approved the phenomenon of adverse selection in all insurance groups, with the exception of rural insurance. Moreover, calculation of the elasticity of medical expenses to reimbursement rate confirmed the existence of moral hazard phenomenon.

CONCLUSIONS

Due to the existence of the phenomena of adverse selection and moral hazard in most of health insurances categories, policymakers need to adjust contracts so that to reduce these phenomena. Given the importance of financing, the presence of such problems can lead to less coverage of health insurance provided by insurers, loss of contracts with health care institutions and service providers, and lower quality of health services.

The effects of retiree health insurance plan characteristics on retirees' choice and employers' costs

To moderate the rate of growth of retiree health insurance costs, employers can modify plans and move retirees into less expensive plans. We examine policy modifications implemented by the North Carolina State Health Plan. We investigate whether incentives produce the desired plan elections and whether these changes, along with cost shifting, produce the expected reductions in cost growth. Using individual-level administrative data, along with aggregated data on expenditures for retirees, we estimate the effects of the introduction and subsequent repeal of a Comprehensive Wellness Initiative for non-Medicare eligible retirees, as well as increases in coinsurance and copayments and the introduction of a premium for all retirees. Over a third of non-Medicare retirees shifted into the least generous plan between June 2009 and December 2012. The level effects on annual costs and unfunded accrued liabilities were relatively modest, but growth rates were diminished. Increases in the retiree premiums reduced the state's projected costs.

The potential and peril of health insurance tobacco surcharge programs: evidence from Georgia's State Employees' Health Benefit Plan

INTRODUCTION

A rapidly growing number of U.S. employers are charging health insurance surcharges for tobacco use to their employees. Despite their potential to price-discriminate, little systematic empirical evidence of the impacts of these tobacco surcharges has been published. We attempted to assess the impact of a health insurance surcharge for tobacco use on cessation among enrollees in Georgia's State Health Benefit Plan (GSHBP).

METHODS

We identified a group of enrollees in GSHBP who began paying the tobacco surcharge at the program's inception in July 2005. We examined the proportion of these enrollees who certified themselves and their family members as tobacco-free and no longer paid the surcharge through April 2011, and we defined this as implied cessation. We compared this proportion to a national expected annual 2.6% cessation rate. We also compared our observation group to a comparison group to assess surcharge avoidance.

RESULTS

By April 2011, 45% of enrollees who paid a tobacco surcharge starting in July 2005 had certified themselves as tobacco-free. This proportion exceeded the expected cessation based on 3 times the national rate (p < .001). The length of enrollment was not statistically different between our observation and comparison groups (p = .427).

CONCLUSIONS

The reported rates of tobacco cessation among GSHBP enrollees resulting from a tobacco surcharge substantially exceed national rates. These surcharges appear to be effective, but the value of these results, and the effectiveness of health insurance surcharges in changing behavior, are tempered by the important limitation that enrollees' certification of quitting was self-reported and not subject to additional, clinical verification.

Selection stories: understanding movement across health plans

This study assesses the factors influencing the movement of people across health plans. We distinguish three types of cost-related transitions: adverse selection, the movement of the less healthy to more generous plans; adverse retention, the tendency for people to stay where they are when they get sick; and aging in place, enrollees' inertia in plan choice, leading plans with older enrollees to increase in relative cost over time. Using data from the Group Insurance Commission in Massachusetts, we show that adverse selection and aging in place are both quantitatively important. Either can materially impact equilibrium enrollments, especially when premiums to enrollees reflect these costs.