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Group Health Insurance: A Hedonic Price Approach


  • Jensen, Gail A
  • Morrisey, Michael A


The authors examine the premium consequences of alternative health insurance provisions by estimating pricing regressions for group insurance with data on 9,019 fee-for-service plans offered by larger firms in the private sector. They find that cost-sharing at the point of purchase, especially for hospital care, significantly lowers fee-for-service premiums. However, some aspects of plan design that are often touted as cost-reducing, such as self-insuring or offering employees the option to join a health maintenance organization, are found to increase premiums. Coverage of alcoholism/chemical dependency treatments, inpatient mental health care, and psychologists' services, which are mandated in many states, are found to be expensive. Copyright 1990 by MIT Press.

Suggested Citation

  • Jensen, Gail A & Morrisey, Michael A, 1990. "Group Health Insurance: A Hedonic Price Approach," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 38-44, February.
  • Handle: RePEc:tpr:restat:v:72:y:1990:i:1:p:38-44

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    References listed on IDEAS

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    Cited by:

    1. Ernst R. Berndt & David M. Cutler & Richard Frank & Zvi Griliches & Joseph P. Newhouse & Jack E. Triplett, 2001. "Price Indexes for Medical Care Goods and Services -- An Overview of Measurement Issues," NBER Chapters,in: Medical Care Output and Productivity, pages 141-200 National Bureau of Economic Research, Inc.
    2. Boone, J. & Douven, R.C.M.H. & Droge, C. & Mosca, I., 2010. "Health Insurance Competition : The Effect of Group Contracts," Discussion Paper 2010-55, Tilburg University, Center for Economic Research.
    3. Joseph P. Newhouse, 2001. "Medical Care Price Indices: Problems and Opportunities / The Chung-Hua Lectures," NBER Working Papers 8168, National Bureau of Economic Research, Inc.
    4. Hill, Steven C. & Wolfe, Barbara L., 1997. "Testing the HMO competitive strategy: An analysis of its impact on medical care resources," Journal of Health Economics, Elsevier, vol. 16(3), pages 261-286, June.
    5. Nasser Daneshvary & Terrence M. Clauretie, 2007. "Gender Differences In The Valuation Of Employer-Provided Health Insurance," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 800-816, October.
    6. Stéphane Jacobzonne & Edouard Martin & Vincent Perrin & Julien Werle, 1997. "Une approche hedonique de la formation des prix des médicaments remboursables," Économie et Prévision, Programme National Persée, vol. 129(3), pages 73-99.
    7. Chiraz Karamti & Lukasz Grzybowski, 2010. "Hedonic study on mobile telephony market in France: pricing–quality strategies," Netnomics, Springer, vol. 11(3), pages 255-289, October.
    8. Royalty, Anne Beeson, 2008. "Estimating workers' marginal valuation of employer health benefits: Would insured workers prefer more health insurance or higher wages," Journal of Health Economics, Elsevier, vol. 27(1), pages 89-105, January.
    9. Kosteas, Vasilios D. & Renna, Francesco, 2014. "Plan choice, health insurance cost and premium sharing," Journal of Health Economics, Elsevier, vol. 35(C), pages 179-188.
    10. Dalton, Christina Marsh & Holland, Sara B., 2015. "Why Do Firms Use Insurance to Fund Worker Health Benefits? The Role of Corporate Finance," MPRA Paper 61952, University Library of Munich, Germany.

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