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

  • Brigitte Dormont

    (UP9 - Université Paris 9, Dauphine - Université Paris IX - Paris Dauphine, IEMS - Institut d'économie et de management de la santé - Institut d'économie et de management de la santé)

  • Pierre-Yves Geoffard

    (IEMS - Institut d'économie et de management de la santé - Institut d'économie et de management de la santé, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC))

  • Karine Lamiraud

    (IEMS - Institut d'économie et de management de la santé - Institut d'économie et de management de la santé, DEEP - Département d'Econométrie et d'Economie Politique - Université de Lausanne - Université de Lausanne)

This paper focuses on the switching behaviour of sickness fund enrolees in the Swiss 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 still remains large premium variations within cantons. This indicates that competition has not been able so far to lead to a single price, 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 the supplementary insurance. Our aim is to analyse two decisions (switching decision in basic insurance, subscription to supplementary insurance contracts). We use survey data on health plan choice and import some market data related to the sickness funds (number of enrollees, premiums). The decision to switch and the decision to subscribe to a supplementary contract are estimated both separately and jointly. The results suggest that holding a supplementary insurance contract substantially decreases the propensity to switch. However the impact of supplementary insurance is not significant when the individual assesses his/her health as "very good" ; to the contrary, holding a supplementary contract significantly reduces the propensity to switch when the indivual's subjective health status deteriorates. Futhermore, the switching decision is positively influenced by the expected gain of switching. In comparison with the range of the premium difference, the limitations to switch due to the supplementary insurance is moderate, though non negligible. As for the decision to subscribe a supplementary contract, the results show that the income level has a direct positive influence on the propensity to buy a supplementary insurance. Our results suggest that a major mechanism is going on in relation to supplementary insurance: holding a supplementary contract might stop individuals from switching when the individual thinks that she/he could be regarded as a bad risk due to the selection practices that are allowed in supplementary insurance markets. This result bears major policy implications concerning the regulation of basic and supplementary insurance markets.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00587785.

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Date of creation: Oct 2007
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Handle: RePEc:hal:psewpa:halshs-00587785
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  1. repec:pse:psecon:2007-34 is not listed on IDEAS
  2. Beaulieu, Nancy Dean, 2002. "Quality information and consumer health plan choices," Journal of Health Economics, Elsevier, vol. 21(1), pages 43-63, January.
  3. 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.
  4. Brigitte Dormont & Pierre-Yves Geoffard & Karine Lamiraud, 2007. "The influence of supplementary health insurance on switching behaviour : evidence on Swiss data," Working Papers 0702, University of Lausanne, Institute of Health Economics and Management (IEMS).
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  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. 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.
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