Employee Choice of Consumer Driven Health Insurance in a Multi-Plan, Multi-Product Setting

Health Services Research, Vol. 39, No. 4, Part II, pp. 1091-1111, August 2004

Posted: 22 Aug 2004

See all articles by Stephen L. Parente

Stephen L. Parente

University of Illinois at Urbana-Champaign - Department of Economics

Roger Feldman

University of Minnesota - Twin Cities - Department of Economics

Jon Christianson

University of Minnesota - Twin Cities

Abstract

Objective: To determine who chooses a Consumer Driven Health Plan (CDHP) in a multi-plan, multi-product setting, and, specifically, whether the CDHP attracts the sicker employees in a company's risk pool.

Study Design: We estimated a health plan choice equation for employees of the University of Minnesota, who had a choice in 2002 of a CDHP and three other health plans - a traditional HMO, a preferred provider organization (PPO), and a tiered network product based on care systems. Data from an employee survey were matched to information from the university's payroll system.

Principal Findings: Chronic illness of the employee or family members had no effect on choice of the CDHP, but such employees tended to choose the PPO. The employee's age was not related to CDHP choice. Higher-income employees chose the CDHP, as well as those who preferred health plans with a national provider panel that includes their physician in the panel. Employees tended to choose plans with lower out-of-pocket premiums, and surprisingly, employees with a chronic health condition themselves or in their family were more price-sensitive.

Conclusions: This study provides the first evidence on who chooses a CDHP in a multi-plan, multi-product setting. The CDHP was not chosen disproportionately by the young and healthy, but it did attract the wealthy and those who found the availability of providers more appealing. Low out-of-pocket premiums are important features of health plans and in this setting, low premiums appeal to those who are less healthy.

Keywords: Insurance, health, consumer behavior, information, Internet

JEL Classification: I1, D12, D81

Suggested Citation

Parente, Stephen L. and Feldman, Roger and Christianson, Jon, Employee Choice of Consumer Driven Health Insurance in a Multi-Plan, Multi-Product Setting. Health Services Research, Vol. 39, No. 4, Part II, pp. 1091-1111, August 2004, Available at SSRN: https://ssrn.com/abstract=579023

Stephen L. Parente (Contact Author)

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

Roger Feldman

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
15-205 Phillips-Wangensteen
Minneapolis, MN 55455
United States
612-624-5669 (Phone)

Jon Christianson

University of Minnesota - Twin Cities ( email )

19th Avenue South
Healthcare Management, Inst For Hlth Services Rese
Minneapolis, MN 55455
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,150
PlumX Metrics