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

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  • Jonas Pendzialek
  • Dusan Simic
  • Stephanie Stock

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. Copyright Springer-Verlag Berlin Heidelberg 2016

Suggested Citation

  • Jonas 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:p:5-21
    DOI: 10.1007/s10198-014-0650-0
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    10. Johnston, Bridget M. & Burke, Sara & Barry, Sarah & Normand, Charles & Ní Fhallúin, Maebh & Thomas, Steve, 2019. "Private health expenditure in Ireland: Assessing the affordability of private financing of health care," Health Policy, Elsevier, vol. 123(10), pages 963-969.
    11. 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.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Erling Barth & Alex Bryson & Harald Dale-Olsen, 2020. "Do Public Subsidies of Union Membership Increase Union Membership Rates?," DoQSS Working Papers 20-14, Quantitative Social Science - UCL Social Research Institute, University College London.
    13. Jing Jian Xiao & Chunsheng Tao, 2020. "Consumer finance/household finance: the definition and scope," China Finance Review International, Emerald Group Publishing Limited, vol. 11(1), pages 1-25, June.
    14. Gabriela Mihaela Mure?an & Cristian Mihai Dragos & Codru?a Mare & Simona Laura Dragos & Alexandra Pintea, 2021. "Socio-Economic and Macro-Financial Determinants and Spatial Effects on European Private Health Insurance Markets," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(56), pages 290-290, February.
    15. 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.
    16. Patrick Opoku Asuming & Hyuncheol Bryant Kim & Armand Sim, 2021. "Selection and Behavioral Responses of Health Insurance Subsidies in the Long Run: Evidence from a Field Experiment in Ghana," Papers 2105.00617, arXiv.org.
    17. Rudy Douven & Katalin Katona & Frederik Schut & Victoria Shestalova, 2017. "Switching gains and health plan price elasticities: 20 years of managed competition reforms in The Netherlands," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(8), pages 1047-1064, November.
    18. Dronyk-Trosper Trey & Stitzel Brandli, 2020. "Analyzing the Effect of Mandatory Water Restrictions on Water Usage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(2), pages 1-13, April.
    19. 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.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Albrecht, Martin, 2018. "Potenziale für mehr Wettbewerb im Gesundheitswesen: Expertise," Working Papers 05/2018, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.

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    More about this item

    Keywords

    Health insurance; Price elasticity; Systematic review; Managed competition; I13; G22; D12;
    All these keywords.

    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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