Switching benefits and costs in competitive health insurance markets: A conceptual framework and empirical evidence from the Netherlands. Issue 5 (May 2015)

• Record Type: Journal Article
• Authors: Duijmelinck, Daniëlle M.I.D.; Mosca, Ilaria; van de Ven, Wynand P.M.M.
• Is Part Of: Health policy. Volume 119:Issue 5(2015)
• Page Start: 664
• Page End: 671
• Publication Date: 2015-05
• Subjects: D12 -- G22 -- I11 -- I13 -- I18; Health insurance -- Switching behaviour -- Competitive insurance market -- Switching costs -- Switching benefits; Medical education -- Periodicals; Medical policy -- Periodicals; Delivery of Health Care -- Periodicals; Education, Medical -- Periodicals; Health Education -- Periodicals; Health Planning -- Periodicals; Public Policy -- Periodicals; Enseignement médical -- Périodiques; Politique sanitaire -- Périodiques; Medical education; Medical policy; Periodicals; Electronic journals; Electronic journals; 362.1
• DOI: 10.1016/j.healthpol.2014.11.015
• Languages: English
• ISSNs: 0168-8510

Abstract

Highlights: Consumers mainly switched insurer because of (1) price and (2) benefits of supplementary insurance. 'Benefit loss' costs were the main switching costs in the Netherlands. Switching costs restricted consumer choice of unhealthy consumers. Insurers have reduced incentives to act as quality-conscious purchasers of care. Abstract: Competitive health insurance markets will only enhance cost-containment, efficiency, quality, and consumer responsiveness if all consumers feel free to easily switch insurer. Consumers will switch insurer if their perceived switching benefits outweigh their perceived switching costs. We developed a conceptual framework with potential switching benefits and costs in competitive health insurance markets. Moreover, we used a questionnaire among Dutch consumers (1091 respondents) to empirically examine the relevance of the different switching benefits and costs in consumers' decision to (not) switch insurer. Price, insurers' service quality, insurers' contracted provider network, the benefits of supplementary insurance, and welcome gifts are potential switching benefits. Transaction costs, learning costs, 'benefit loss' costs, uncertainty costs, the costs of (not) switching provider, and sunk costs are potential switching costs. In 2013 most Dutch consumers switched insurer because of (1) price and (2) benefits of supplementary insurance. Nearly half of the non-switchers – and particularly unhealthy consumers – mentioned one of the switching costs as their main reason for not switching. Because unhealthy consumers feel not free to easily switch insurer, insurers have reduced incentives to invest in high-quality care for them. Therefore, policymakers should develop strategies to increase consumer choice.