Choice, Price Competition and Complexity in Markets for Health Insurance

No 13817, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The United States and other nations rely on consumer choice and price competition among competing health plans to allocate resources in the health sector. A great deal of research has examined the efficiency consequences of adverse selection in health insurance markets, less attention has been devoted to other aspects of consumer choice. The nation of Switzerland offers a unique opportunity to study price competition in health insurance markets. Switzerland regulates health insurance markets with the aim of minimizing adverse selection and encouraging strong price competition. We examine consumer responses to price differences in local markets and the degree of price variation in local markets. Using both survey data and observations on local markets we obtain evidence suggesting that as the number of choices offered to individuals grow their willingness to switch plans given a set of price dispersion differences declines allowing large price differences for relatively homogeneous products to persist. We consider explanations for this phenomenon from economics and psychology.

JEL-codes: I11 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-com, nep-ias and nep-mkt
Note: EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published as Frank, Richard G. & Lamiraud, Karine, 2009. "Choice, price competition and complexity in markets for health insurance," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 550-562, August.

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Journal Article: Choice, price competition and complexity in markets for health insurance (2009)
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