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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.

Suggested Citation

  • Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2009. "The influence of supplementary health insurance on switching behaviour: evidence from Swiss data," Health Economics, John Wiley & Sons, Ltd., vol. 18(11), pages 1339-1356.
    • Handle: RePEc:wly:hlthec:v:18:y:2009:i:11:p:1339-1356
    DOI: 10.1002/hec.1441
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    References listed on IDEAS

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    Cited by:

    1. Alexander Kemnitz, 2013. "A Simple Model of Health Insurance Competition," German Economic Review, Verein für Socialpolitik, vol. 14(4), pages 432-448, November.
    2. Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2012. "Assurance maladie en Suisse : les assurances supplémentaires nuisent-elles à la concurrence sur l'assurance de base ?," Économie et Statistique, Programme National Persée, vol. 455(1), pages 71-87.
    3. Lieke H. H. M. Boonen & Trea Laske-Aldershof & Frederik T. Schut, 2016. "Switching health insurers: the role of price, quality and consumer information search," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(3), pages 339-353, April.
    4. Brigitte Dormont & Mathilde Péron, 2016. "Does Health Insurance Encourage the Rise in Medical Prices? A Test on Balance Billing in France," Health Economics, John Wiley & Sons, Ltd., vol. 25(9), pages 1073-1089, September.
    5. repec:eee:hepoli:v:121:y:2017:i:10:p:1085-1092 is not listed on IDEAS
    6. Sebastian Gechert, 2010. "Supplementary Private Health Insurance in Selected Countries: Lessons for EU Governments?," CESifo Economic Studies, CESifo, vol. 56(3), pages 444-464, September.
    7. repec:hal:journl:hal-00808420 is not listed on IDEAS
    8. 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.
    9. Thomson, Sarah & Busse, Reinhard & Crivelli, Luca & van de Ven, Wynand & Van de Voorde, Carine, 2013. "Statutory health insurance competition in Europe: A four-country comparison," Health Policy, Elsevier, vol. 109(3), pages 209-225.
    10. 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.
    11. 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;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(1), pages 51-62, February.
    12. 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.
    13. Duijmelinck, Daniëlle M.I.D. & Mosca, Ilaria & van de Ven, Wynand P.M.M., 2015. "Switching benefits and costs in competitive health insurance markets: A conceptual framework and empirical evidence from the Netherlands," Health Policy, Elsevier, vol. 119(5), pages 664-671.
    14. repec:dau:papers:123456789/15235 is not listed on IDEAS
    15. Lamiraud , Karine, 2013. "Switching costs in competitive health insurance markets," ESSEC Working Papers WP1305, ESSEC Research Center, ESSEC Business School.
    16. Dormont, B. & Péron, M., 2015. "Does health insurance encourage the rise in medical prices?," Health, Econometrics and Data Group (HEDG) Working Papers 15/16, HEDG, c/o Department of Economics, University of York.
    17. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2016. "Switching insurer in the Irish voluntary health insurance market: determinants, incentives, and risk equalization," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(7), pages 823-831, September.
    18. 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.
    19. repec:dau:papers:123456789/11294 is not listed on IDEAS
    20. repec:eee:jhecon:v:55:y:2017:i:c:p:262-273 is not listed on IDEAS
    21. Daniëlle Duijmelinck & Wynand Ven, 2014. "Choice of insurer for basic health insurance restricted by supplementary insurance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(7), pages 737-746, September.
    22. Bryan Dowd & Roger Feldman, 2012. "Competition and Health Plan Choice," Chapters,in: The Elgar Companion to Health Economics, Second Edition, chapter 13 Edward Elgar Publishing.

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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