Abstract
We examine the impact of price, service quality and information search on people’s propensity to switch health insurers in the competitive Dutch health insurance market. Using panel data from annual household surveys and data on health insurers’ premiums and quality ratings over the period 2006–2012, we estimate a random effects logit model of people’s switching decisions. We find that switching propensities depend on health plan price and quality, and on people’s age, health, education and having supplementary or group insurance. Young people (18–35 years) are more sensitive to price, whereas older people are more sensitive to quality. Searching for health plan information has a much stronger impact on peoples’ sensitivity to price than to service quality. In addition, searching for health plan information has a stronger impact on the switching propensity of higher than lower educated people, suggesting that higher educated people make better use of available health plan information. Finally, having supplementary insurance significantly reduces older people’s switching propensity.
Highlights
Health care reforms in various countries aim at improving the efficiency of health care delivery by enhancing consumer choice
We examine the impact of price, service quality and information search on people’s propensity to switch health insurers in the competitive Dutch health insurance market
Since adequate health plan choice by consumers is an essential precondition for a successful performance of health care systems based on managed competition, understanding the determinants of consumer switching behaviour and the sensitivity of consumers to the price and quality of health plans is of crucial importance
Summary
Health care reforms in various countries aim at improving the efficiency of health care delivery by enhancing consumer choice. Countries with a social health insurance system (e.g. Germany, Netherlands, Switzerland) focus on giving consumers an annual free choice of health insurer to motivate health insurers to act as a prudent buyer of health services on behalf of their enrollees [55]. These reforms are based on the theoretical model of payer-driven managed competition [23]. If consumers do not have the information or ability to make an adequate choice among health plans, or face high search or switching costs, insurers may have insufficient incentives to improve efficiency and to accommodate consumer preferences, resulting in a loss of welfare [34].1. Since adequate health plan choice by consumers is an essential precondition for a successful performance of health care systems based on managed competition, understanding the determinants of consumer switching behaviour and the sensitivity of consumers to the price and quality of health plans is of crucial importance
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