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Differences in price elasticities of demand for health insurance: a systematic review

Author

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  • Jonas B. Pendzialek

    () (University Hospital of Cologne)

  • Dusan Simic

    (University Hospital of Cologne)

  • Stephanie Stock

    (University Hospital of Cologne)

Abstract

Abstract Many health insurance systems apply managed competition principles to control costs and quality of health care. Besides other factors, managed competition relies on a sufficient price-elastic demand. This paper presents a systematic review of empirical studies on price elasticity of demand for health insurance. The objective was to identify the differing international ranges of price elasticity and to find socio-economic as well as setting-oriented factors that influence price elasticity. Relevant literature for the topic was identified through a two-step identification process including a systematic search in appropriate databases and further searches within the references of the results. A total of 45 studies from countries such as the USA, Germany, the Netherlands, and Switzerland were found. Clear differences in price elasticity by countries were identified. While empirical studies showed a range between −0.2 and −1.0 for optional primary health insurance in the US, higher price elasticities between −0.6 and −4.2 for Germany and around −2 for Switzerland were calculated for mandatory primary health insurance. Dutch studies found price elasticities below −0.5. In consideration of all relevant studies, age and poorer health status were identified to decrease price elasticity. Other socio-economic factors had an unclear impact or too limited evidence. Premium level, range of premiums, homogeneity of benefits/coverage and degree of forced decision were found to have a major influence on price elasticity in their settings. Further influence was found from supplementary insurance and premium-dependent employer contribution.

Suggested Citation

  • Jonas B. Pendzialek & Dusan Simic & Stephanie Stock, 2016. "Differences in price elasticities of demand for health insurance: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 5-21, January.
  • Handle: RePEc:spr:eujhec:v:17:y:2016:i:1:d:10.1007_s10198-014-0650-0
    DOI: 10.1007/s10198-014-0650-0
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:eujhec:v:18:y:2017:i:8:d:10.1007_s10198-017-0876-8 is not listed on IDEAS
    2. Rudy Douven & Ron van der Heijden & Thomas McGuire & Frederik T. Schut, 2017. "Premium Levels and Demand Response in Health Insurance: Relative Thinking and Zero-Price Effects," NBER Working Papers 23846, National Bureau of Economic Research, Inc.
    3. Rudy Douven & Katalin Katona & Erik Schut & Victoria Shestalova, 2017. "Switching gains and health plan price elasticities: 20 years of managed competition reforms in the Netherlands," CPB Discussion Paper 343, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Rudy Douven & Ron van der Heijden & Thomas McGuire & Erik Schut, 2017. "Premium levels and demand response in health insurance: relative thinking and zero-price effects," CPB Discussion Paper 366, CPB Netherlands Bureau for Economic Policy Analysis.
    5. repec:spr:eujhec:v:18:y:2017:i:7:d:10.1007_s10198-016-0829-7 is not listed on IDEAS

    More about this item

    Keywords

    Health insurance; Price elasticity; Systematic review; Managed competition;

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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