 |
The 130th Annual Meeting of APHA |
|
The 130th Annual Meeting of APHA |
Adam J. Atherly, PhD, Curtis Florence, PhD, and Kenneth Thorpe, PhD. Health Policy and Management, Emory University, 1518 Clifton Rd. NE, Atlanta, GA 30084, 404-727-1175, aatherl@sph.emory.edu
Background: Employers are increasingly caught between a desire to provide high quality health insurance for their employees and the need to control the cost of coverage. One option increasingly adopted by employers is to offer several health plan options to employees, but to only subsidize the more inexpensive plans. This approach can serve to both limit employers’ financial liability and provide employees a choice of different health plans. In theory, this approach may also reduce overall expenditures if employees are responsive to differences in out-of-pocket (OOP) premiums and select cheaper plans. However, this approach may lead to segmentation of the employee risk pool, with high cost individuals congregating in plans with more generous benefits and provider networks. The purpose of this paper is to 1) identify the extent of plan switching in a large employer population 2) model plan and individual characteristics associated with switching.
Data are drawn from the Federal Employee Health Benefits program (FEHB). FEHB is the largest employment based health insurance program and has been touted as a model for health care reform and managed competition. Individual plan choices for 1.84 million individuals were examined from 1996-1998.
Methods: The latent propensity to switch was modeled using a probit regression and an indicator variable for individuals who switched during the annual open enrollment. We model switching as a function of changes in plan benefits and OOP premiums, individual characteristics and interactions between individual and plan characteristics. The decision to switch in the final year of our panel is modeled separately for the switchers and the non-switchers using a bivariate probit with correlated errors.
Results: 10.9% of FEHB members switched plans 1996-1997, while 13.1% switched the following year. Of those that switched 1996-1997, 21.2% switched again 1997-1998. In both years, switching was more likely for employees who were younger, female and with lower incomes. In 1996-1997, switching was more likely from higher priced plans, although the opposite pattern was observed 1997-1998. Younger employees disproportionately switched into lower priced plans. Employees who switched 1996-1997 were more likely to switch again 1997-1998, but the effect was smaller for men than women.
Conclusions: This study finds that individuals are willing to switch health plans if provided a financial incentive to pick lower priced plans. However, switching is more likely for younger, presumably healthier, members, suggesting the potential for risk pool segmentation. There is also evidence of a subset of serial switchers.
Learning Objectives:
Keywords: Health Insurance, Economic Analysis
Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.