Health Insurance Take-up by the Near Elderly

Abstract

This study examines the effect of price on the demand for health insurance by early retirees between the ages of 55 and 64. The analysis is based on administrative data from a medium sized employer and takes advantage of a natural experiment created by the firm's health insurance contribution policy. The amount the firm contributes toward retiree health insurance coverage depends on when a person retired and her years of service at that date. As a result of this policy, there is considerable variation in out-of-pocket premiums faced by individuals in the data, but this variation is independent of the non-price attributes of the health insurance plans offered, and plausibly exogenous to individual characteristics that are likely to affect the demand for insurance. We find that price has a statistically significant but small effect on the decision to take up coverage. The implied elasticities are very similar to results found in previous studies using very different data.

Community Rating, Entry-Age Rating and Adverse Selection in Private Health Insurance in Australia

“…This dramatic change was only partly due to the improvement in the risk pool, as can be seen by the fact that B* also declined even though the population was ageing. The explanation is that group-specific spending per capita (M) was falling over plausibly exogenous variation in price obtain take-up elasticity estimates in the range of À0.10 or below (Chernew et al (1997); Blumberg et al (2001); Buchmueller and Ohri (2006)). However, because Australia's Medicare system provides a better substitute for private insurance than is available to most U.S. consumers, it seems likely that the demand for insurance is more elastic in Australia.…”

Insurance Loss Coverage Under Restricted Risk Classification: The Case of Iso-Elastic Demand

“…A questionnaire survey about life insurance purchasing decisions produced an estimate of −0.66 (Viswanathan et al, 2007). For private health insurance in the US, several studies estimate demand elasticities in the range of 0 to −0.2 (Chernew et al, 1997;Blumberg et al, 2001;Buchmueller & Ohri, 2006). For private health insurance in Australia, Butler (1999) estimates demand elasticities in the range −0.36 to −0.50.…”