Premium elasticities of health plan choice

We estimate out-of-pocket premium elasticities of health plan choice using panel data from five Twin Cities employers. Using simple methods and a small data set, we replicate the findings of our previous study, which was considerably more detailed, difficult, and expensive. An increase of $5 in 1984 dollars ($6.95 in 1993) in the relative out-of-pocket premium for single coverage is predicted to decrease that plan's share of the single coverage market by .112 percentage points. The corresponding elasticity is approximately -7.9. This simple analysis should be repeated by other analysts in their market areas to determine the consistency of findings across geographic areas and over time.