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Switching rates in health insurance markets decrease with age: empirical evidence and policy implications from the
Daniëlle M I D Duijmelinck1, Wynand P M M van de Ven1
1Institute of Health Policy and Management,Erasmus University Rotterdam,Rotterdam,the Netherlands.
Health Economics, Policy, and Law
|July 16, 2015
Summary
Elderly and unhealthy consumers switch health insurers less often due to higher perceived costs. This reduces insurer incentives to improve care quality for these groups, necessitating strategies to boost their insurer choice.
Area of Science:
- Health economics
- Consumer behavior
- Insurance market dynamics
Background:
- Consumer switching behavior is crucial for insurer responsiveness to heterogeneous preferences.
- Understanding switching patterns among different risk groups is vital for market fairness.
Purpose of the Study:
- To analyze the switching behavior of low-risk (young/healthy) and high-risk (elderly/unhealthy) consumers in the Dutch health insurance market (2009-2012).
- To identify factors influencing health insurer switching rates across demographic and health status groups.
Main Methods:
- Analysis of administrative data (15.3 million individuals) including health status and healthcare expenses.
- Utilized three-year sample data (1152 individuals) for detailed behavioral insights.
Main Results:
- Switching rates significantly decrease with age; consumers aged 25-44 switched 10 times more than those 75+ in 2009.
- Higher predicted healthcare expenses correlate with lower switching rates.
- While healthy consumers switch more than unhealthy ones, this difference narrows when adjusted for age.
Conclusions:
- Higher perceived switching costs for elderly consumers explain their lower switching rates.
- Insurers have reduced incentives to optimize care for elderly consumers due to their lower market mobility.
- Strategies are needed to enhance insurer choice and engagement for elderly consumers.
