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In absolute or relative terms? How framing prices affects the consumer price sensitivity of health plan choice

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  • Ziebarth, N.
  • Schmitz, H.

Abstract

This paper provides field evidence on (a) how price framing affects consumers’ decision to switch health insurance plans and (b) how the price elasticity of demand for health insurance can be influenced by policymakers through simple regulatory efforts. In 2009, in order to foster competition among health insurance companies, German federal regulation required health insurance companies to express price differences between health plans in absolute Euro values rather than percentage point payroll tax differences. Using individuallevel panel data, as well as aggregated health plan-level panel data, we find that the reform led to a sixfold increase in an individual’s switching probability and a threefold demand elasticity increase.

Suggested Citation

  • Ziebarth, N. & Schmitz, H., 2012. "In absolute or relative terms? How framing prices affects the consumer price sensitivity of health plan choice," Health, Econometrics and Data Group (HEDG) Working Papers 12/03, HEDG, c/o Department of Economics, University of York.
  • Handle: RePEc:yor:hectdg:12/03
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    Cited by:

    1. Fossen, Frank M. & König, Johannes, 2015. "Public health insurance and entry into self-employment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112934, Verein für Socialpolitik / German Economic Association.
    2. 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.
    3. 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.
    4. repec:spr:eujhec:v:18:y:2017:i:7:d:10.1007_s10198-016-0829-7 is not listed on IDEAS
    5. 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.
    6. Glenzer, Franca & Gründl, Helmut & Wilde, Christian, 2014. ""And lead us not into temptation": Presentation formats and the choice of risky alternatives," ICIR Working Paper Series 16/14, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
    7. Wuppermann, Amelie & Bauhoff, Sebastian & Grabka, Markus, 2014. "The Price Sensitivity of Health Plan Choice among Retirees: Evidence from the German Social Health Insurance," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100352, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    health insurance; health plan switching; price competition; price elasticity; SOEP;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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