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The influence of supplementary health insurance on switching behaviour: evidence from Swiss data

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  • Brigitte Dormont
  • Pierre-Yves Geoffard
  • Karine Lamiraud

Abstract

This paper focuses on the switching behaviour of enrolees in the Swiss basic health insurance system. Even though the new Federal Law on Social Health Insurance (LAMal) was implemented in 1996 to promote competition among health insurers in basic insurance, there is limited evidence of premium convergence within cantons. This indicates that competition has not been effective so far, and reveals some inertia among consumers who seem reluctant to switch to less expensive funds. We investigate one possible barrier to switching behaviour, namely the influence of supplementary insurance. We use survey data on health plan choice (a sample of 1943 individuals whose switching behaviours were observed between 1997 and 2000) as well as administrative data relative to all insurance companies that operated in the 26 Swiss cantons between 1996 and 2005. The decision to switch and the decision to subscribe to a supplementary contract are jointly estimated. Our findings show that holding a supplementary insurance contract substantially decreases the propensity to switch. However, there is no negative impact of supplementary insurance on switching when the individual assesses his|her health as 'very good'. Our results give empirical support to one possible mechanism through which supplementary insurance might influence switching decisions: given that subscribing to basic and supplementary contracts with two different insurers may induce some administrative costs for the subscriber, holding supplementary insurance acts as a barrier to switch if customers who consider themselves 'bad risks' also believe that insurers reject applications for supplementary insurance on these grounds. In comparison with previous research, our main contribution is to offer a possible explanation for consumer inertia. Our analysis illustrates how consumer choice for one's basic health plan interacts with the decision to subscribe to supplementary insurance. Copyright © 2009 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 18 (2009)
Issue (Month): 11 ()
Pages: 1339-1356

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Handle: RePEc:wly:hlthec:v:18:y:2009:i:11:p:1339-1356

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Anne Beeson Royalty & Neil Solomon, 1999. "Health Plan Choice: Price Elasticities in a Managed Competition Setting," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 1-41.
  2. Rudy Douven & Marco Ligthart & H. Lieverdink & I. Vermeulen, 2007. "Measuring annual price elasticities in Dutch health insurance; a new method," CPB Discussion Paper 90, CPB Netherlands Bureau for Economic Policy Analysis.
  3. Francesca Colombo, 2001. "Towards More Choice in Social Protection?: Individual Choice of Insurer in Basic Mandatory Health Insurance in Switzerland," OECD Labour Market and Social Policy Occasional Papers 53, OECD Publishing.
  4. Strombom, Bruce A. & Buchmueller, Thomas C. & Feldstein, Paul J., 2002. "Switching costs, price sensitivity and health plan choice," Journal of Health Economics, Elsevier, vol. 21(1), pages 89-116, January.
  5. Beaulieu, Nancy Dean, 2002. "Quality information and consumer health plan choices," Journal of Health Economics, Elsevier, vol. 21(1), pages 43-63, January.
  6. Mathias Kifmann, 2006. "Risk selection and complementary health insurance: The Swiss approach," International Journal of Health Care Finance and Economics, Springer, vol. 6(2), pages 151-170, June.
  7. Marcus Tamm & Harald Tauchmann & Jürgen Wasem & Stefan Gre�, 2007. "Elasticities of market shares and social health insurance choice in germany: a dynamic panel data approach," Health Economics, John Wiley & Sons, Ltd., vol. 16(3), pages 243-256.
  8. Abraham, Jean M. & Feldman, Roger & Carlin, Caroline & Christianson, Jon, 2006. "The effect of quality information on consumer health plan switching: Evidence from the Buyers Health Care Action Group," Journal of Health Economics, Elsevier, vol. 25(4), pages 762-781, July.
  9. Buchmueller, Thomas C. & Feldstein, Paul J., 1997. "The effect of price on switching among health plans," Journal of Health Economics, Elsevier, vol. 16(2), pages 231-247, April.
  10. Robert Nuscheler & Thomas Knaus, 2005. "Risk selection in the German public health insurance system," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1253-1271.
  11. Paolucci, Francesco & Schut, Erik & Beck, Konstantin & Greß, Stefan & Van De Voorde, Carine & Zmora, Irit, 2007. "Supplementary health insurance as a tool for risk-selection in mandatory basic health insurance markets," Health Economics, Policy and Law, Cambridge University Press, vol. 2(02), pages 173-192, April.
  12. Trea Laske-Aldershof & Erik Schut & Konstantin Beck & Stefan Gress & Amir Shmueli & Carine Van de Voorde, 2004. "Consumer Mobility in Social Health Insurance Markets: A Five-Country Comparison," Applied Health Economics and Health Policy, Springer Healthcare | Adis, vol. 3(4), pages 229-241.
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Cited by:
  1. Rainer Winkelmann, 2012. "Copula Bivariate Probit Models: With An Application To Medical Expenditures," Health Economics, John Wiley & Sons, Ltd., vol. 21(12), pages 1444-1455, December.
  2. Sebastian Gechert, 2009. "Supplementary Private Health Insurance in Selected Countries: Lessons for EU Governments?," CESifo Working Paper Series 2739, CESifo Group Munich.
  3. Dormont, Brigitte & Geoffard, Pierre-Yves & Lamiraud, Karine, 2013. "Assurance maladie en Suisse : les assurances supplémentaires nuisent-elles à la concurrence sur l'assurance de base ?," Economics Papers from University Paris Dauphine 123456789/11294, Paris Dauphine University.
  4. Shmueli, Amir, 2011. "Switching sickness funds in Israel: Adverse selection or risk selection? Some insights from the analysis of the relative costs of switchers," Health Policy, Elsevier, vol. 102(2), pages 247-254.
  5. Lamiraud , Karine, 2013. "Switching costs in competitive health insurance markets," ESSEC Working Papers WP1305, ESSEC Research Center, ESSEC Business School.
  6. Anne-Fleur Roos & Frederik Schut, 2012. "Spillover effects of supplementary on basic health insurance: evidence from the Netherlands," The European Journal of Health Economics, Springer, vol. 13(1), pages 51-62, February.

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