Switching Health Insurance Plans: Results from a Health Survey

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.

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

“…4 Over the period August 2013 to June 2014, all policies were flagged at their time of renewal and information was collected for the previous 12 months for each policy. All policies were 12-month contacts.…”

“…The individual decision to switch insurer can be partly understood by weighing up the costs and benefits of switching [1][2][3][4]. Particularly, price and quality considerations should influence choice of health insurer.…”

“…Switching costs may be subject to behavioral biases that do not reflect rational choice. For example, an endowment effect or status-quo bias may lead to individuals placing an artificially high value on their current insurer [4]. Moreover, search and switching costs tend to be higher for high-risk individuals (e.g., the old and sick) [4].…”

“…For example, an endowment effect or status-quo bias may lead to individuals placing an artificially high value on their current insurer [4]. Moreover, search and switching costs tend to be higher for high-risk individuals (e.g., the old and sick) [4]. These groups may have more difficulty navigating the market or may be more concerned about issues around continuity of coverage and therefore less likely to switch.…”

“…Particularly important is that consumers display a degree of pricesensitivity and are willing to switch insurer in search of the best-value products. In addition, theory would suggest that low-risk consumers (e.g., young, healthy) are more likely to switch insurer [4]. From a demand-side perspective, this cohort may face lower search and switching costs, while in a community-rated market, they can represent more profitable risks, motivating insurers to focus their resources on attracting them.…”