Progress 10/01/00 to 09/30/05
Outputs
Two papers have resulted from funding of this project. The first paper is titled 'A Family Decision-Making Model of Health Insurance Choices.' In this paper I evaluate the health insurance choices of families enrolled in a direct-contracting model developed by an employer purchasing alliance. This is the first study that has constructed an intra-family utility model of health plan choice. I construct individual utility functions by using stated preferences of individual family members and the attributes of different health benefit options. Conditional logit methods are used to estimate the weights for each family member's utility in the family utility function. We find that families are sensitive to changes in the tax-adjusted, out-of-pocket premium. In addition, families who have specific primary care physicians and high importance ratings for seeing these primary care physicians prefer the option that offers a potentially larger selection of physicians, compared to
families with low importance ratings. I did not find that families select health benefit options based on the preferences of children or family members with a chronic illness. The second paper, titled 'Do Healthy and Unhealthy Consumers Have Different Preferences for Health Insurance Premiums and Quality', addresses the following question: do healthy and unhealthy consumers have different preferences for health insurance premiums and quality? The answer to this question has important implications for the ability of competitive health insurance markets to provide affordable access to high-quality medical care for people who, for the most part, don't need high-quality care until they become ill. The analysis is based on responses from a survey of approximately 1,000 single employees in 19 Minneapolis-area companies. We asked the respondents to rate the importance of low premiums, quality of providers, and quality of services in a health plan. We used the employees' stated importance
ratings as dependent variables in statistical models that included self-reported health status and chronic conditions, age, education, income, and other explanatory variables. We found that healthy and unhealthy employees have similar ratings for the importance of low premiums and aspects of provider and service quality. Health-related diversity of preferences is not likely to cause the employees in this study to select different insurance plans. However, we did find evidence of diverse preferences related to employee demographics such as income, education, and gender. These papers are currently under review at quality journals (Journal of Human Resources and Journal of Consumer Policy). The first paper was presented at the American Economic Association's Annual Meeting in Washington D.C. on January 3, 2003.
Impacts
The papers produced will have an impact in the field of health policy and health services research. The papers are in a set of only a few that attempt to investigate and understand health insurance chioces within families and the sustainability of health insurance markets.
Publications
- No publications reported this period
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Progress 01/01/01 to 12/31/01
Outputs
Regarding my research on the selection of health care provider groups, my preliminary findings suggest that standardized benefits across provider groups along with level dollar premium contributions by employers are significant factors in finding large premium elasticities. The resultsof this study suggest that consumers are responding to price and quality information, implying that managed competition models could be instrumental in controlling rising health insurance premiums. I'm also analyzing health insurance decisions within families. Health insurance decisions within families have not been adequately addressed in the health plan choice literature. The lack of studies on health insurance decisions within families is due to the lack of circumstances where researchers are able to observe different individuals within a family choosing different health plans. Thus far, studies have only been able to treat the family as a single unit-analyzing the behavior of 'the
whole family' rather than of individual family members. For instance, employee benefit programs that require all family members to enroll in the same plan have been analyzed, but these studies fail to address the question of how families make decisions when individual family members may prefer different plans. This question is important to firms as they make decisions on the type and design of health benefit programs. Previous studies have dealt with differences in single and family decisions by, at most, estimating separate choice equations for single individuals versus families. In this study I evaluate the choices of health benefit plans by family members enrolled in a direct-contracting model developed by an employer purchasing alliance. The unique feature of the employer model is that it allows each family member to choose a different health benefit plan. Hence, it provides the appropriate situation to study within-family health insurance decisions. This work is significant to
the health plan choice literature because it is the first study that attempts to understand health insurance choices by individual family members. In order to do this, I construct an intra-family utility model by using stated preferences of individual family members. I find that the model provides better estimates than the standard 'single unit' family health plan choice model, which produces positive premium coefficients. In the constructed model I find that families are sensitive to changes in the tax-adjusted, out-of-pocket premium. In addition, families who have specific primary care physicians and have high importance ratings for seeing these primary care physicians prefer the health benefit plan that offers greater access to physicians compared to families with low importance ratings. It does not appear that families select health benefit plans based on the preference ratings by children or by family members with a chronic illness, however.
Impacts
To date my findings support the policy used by employers to contribute a level dollar or fixed contribution to premiums. This policy exposes employees to the marginal difference in premiums and increases their price sensitivity. When employees pay more of the marginal cost of insurance their choices should be more efficient, since individuals who do not value insurance at its full marginal cost will choose cheaper alternatives. It also gives more power to consumers to shop for provider groups as opposed to employers. Nonetheless, increased cost-sharing maybe detrimental to low-income groups who have less of an ability to pay for health insurance coverage.
Publications
- Schultz, J., Call, K., Feldman, R. & Christianson, J. 2001. Do Employees Use Report Cards to Assess Health Care Provider Systems? Health Services Research, 2001; 36(3): 509-530.
- Feldman, R. & Schultz, J. 2001. Who Uses Flexible Spending Accounts: The Effects of Employee Characteristics and Employer Strategies. Medical Care, 2001; 39:661-669.
- Harris, K., Schultz, J., & Feldman, R. 2002. Measuring Consumer Perceptions of Quality Differences Among Competing Health Plans. Journal of Health Economics, 2002; 21(1): 1-17.
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Progress 01/01/00 to 12/31/00
Outputs
Regarding my research on the selection of health care provider groups, my preliminary findings suggest that standardized benefits across provider groups along with level dollar premium contributions by employers are significant factors in finding large premium elasticities. The results of this study suggest that consumers are responding to price and quality information, implying that managed competition models could be instrumental in controlling rising health insurance premiums. The findings also support the policy used by employers to contribute a level dollar or fixed contribution to premiums. This policy exposes employees to the marginal difference in premiums and increases their price sensitivity. When employees pay more of the marginal cost of insurance their choices should be more efficient, since individuals who do not value insurance at its full marginal cost will choose cheaper alternatives. It also gives more power to consumers to shop for provider groups
as opposed to employers.
Impacts
(N/A)
Publications
- Feldman, R., Christianson, J., & Schultz, J. 2000. "Do Consumers Use Information To Choose A Health Care Provider System?" Milbank Quarterly, March.
- Harris, K., Feldman, R., Schultz, J., & Christianson, J. 2001. "Consumer Perceptions of Quality Differences Among Competing Health Care Systems." In Consumer Driven Health Care, Collected Volume, edited by Regina Herzlinger, Jossey-Bass Publishers.
- Schultz, J., Call, K., Feldman, R. & Christianson, J. 2001. "Do Employees Use Report Cards to Assess Health Care Provider Systems?" Health Services Research, forthcoming.
- Feldman, R. & Schultz, J. 2001. "Who Uses Flexible Spending Accounts: The Effects of Employee Characteristics and Employer Strategies." Medical Care, forthcoming.
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