Understanding Consumer Preferences in the Context of Managed Competition: Evidence from a Field Experiment

Background: In many countries across the world, health insurance is key for accessing health care. In Colombia, reforms enacted in 1993 established a two-tiered social insurance program. One part is a subsidized program for the low-income and the other main part is a contributory system financed through payroll taxes. However, many Colombians remain uninsured, despite the fact that the subsidized program is free. Objective: To examine how rural Colombians value various characteristics of health insurance plans. Methods: A field experiment to ask Colombians to rate various hypothetical insurance plans in order to examine what characteristics are most important to them. These types of studies, called discrete-choice or stated preference methods, allow health economists and policy makers to examine how individuals make choices. Results: Consumers with and without insurance valued expanded health benefits and family coverage more than other attributes. Low-income Colombians were willing to pay nearly 50% of the cost of increasing benefits. Policy Implications: Choice experiments provide a powerful policy tool for governments across the world struggling to provide universal health coverage. This valuable information cannot be delineated from standard regression analyses because we cannot observe preferences for options that are not yet available. Consumer preferences such as the ones we have elicited may also help insurers design health plans that tailor benefits to increase enrollment, while still controlling costs.