Consumer price sensitivity in Dutch health insurance

Abstract

Aim To estimate the price sensitivity of consumer choice of health insurance firm. Method Using paneldata of the flows of insured between pairs of Dutch sickness funds during the period 1993–2002, we estimate the sensitivity of these flows to differences in insurance premium. Results The price elasticity of residual demand for health insurance was low during the period 1993–2002, confirming earlier findings based on annual changes in market share. We find small but significant elasticities for basic insurance but insignificant elasticities for supplementary insurance. Young enrollees are more price sensitive than older enrollees. Conclusion Competition was weak in the market for health insurance during the period under study. For the market-based reforms that are currently under way, this implies that measures to promote competition in the health insurance industry may be needed.

Price elasticities in the German Statutory Health Insurance market before and after the health care reform of 2009

“…The general price elasticity of −0.81 before the reform, found in this study, 5 is on a comparable level with price elasticities found in the US [9,10] and the Netherlands, prior to the local reform [17][18][19], but somewhat lower compared to Swiss price elasticities [21][22][23]. That seems unexpected given several factors that would lead to a higher expectation on price elasticity in Germany.…”

“…Besides the US, only few countries have similar systems with competition in the primary health insurance market [15,16]. Within this group of countries, research found higher price elasticities in the Netherlands (−0.5 to −7.0) [17][18][19][20], Switzerland (−1 to −2) [21][22][23] and Germany.…”

Switching insurer in the Irish voluntary health insurance market: determinants, incentives, and risk equalization

“…However, price sensitivity in the Dutch system has been found to be comparatively low [11,17], potentially the result of historically more robust risk equalization, which helps limit price variation between insurers. Price sensitivity has also been shown to vary by risk status, with higher-risk individuals less responsive to changes in price than their low-risk counterparts [9,18,19]. Quality has also been shown to influence consumer decision-making.…”

Pricing behaviour of nonprofit insurers in a weakly competitive social health insurance market

“…On the contrary, we find that most health insurers charging a higher premium than their competitors do so every year. This finding suggests that premium differences across health insurers persist over time, which is supported by a positive and high Spearman correlation coefficient for premiums (Van Dijk et al, 2008). 13 We find no evidence of cross subsidisation from supplementary to basic insurance, since the estimated coefficients for PSUP are positive and significant (except for models A and E).…”

“…If competition is strong, however, prices would be forced down to the competitive level, in which case there would presumably be little difference between pricing behaviour of nonprofit and for-profit insurers. Empirical studies show, however, that consumer price sensitivity in the Dutch social health insurance market was very low and therefore competitive pressure was rather weak (Schut and Hassink, 2002;Schut et al, 2003;Douven et al, 2007;Van Dijk et al, 2008). If competition is not sufficient to drive premiums down to the competitive level, the question becomes how nonprofit health insurers set premiums.…”