MarketWatch: Consumer decision making in the individual health insurance market

Health Affairs

Volumn 25, Issue 3, 2006, Pages

  Marquis, M Susan ^a   Buntin, Melinda Beeuwkes ^a   Escarce, José J ^a,b   Kapur, Kanika ^a,c   Louis, Thomas A ^d   Yegian, Jill M ^e  

^a RAND CORPORATION   (United States)

^b UNIVERSITY OF CALIFORNIA   (United States)

^c UNIVERSITY COLLEGE DUBLIN   (Ireland)

^d JOHNS HOPKINS BLOOMBERG SCHOOL OF PUBLIC HEALTH   (United States)

^e California HealthCare Foundation   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; CONSUMER; COST; DECISION MAKING; ECONOMICS; HEALTH CARE COST; HEALTH INSURANCE; HUMAN; MANAGEMENT; PATIENT; RISK ASSESSMENT; UNITED STATES;

CALIFORNIA; CONSUMER SATISFACTION; DECISION MAKING; DEDUCTIBLES AND COINSURANCE; HEALTH CARE SECTOR; HUMANS; INSURANCE, HEALTH; MEDICALLY UNINSURED; POLICY MAKING; RISK ASSESSMENT;

EID: 33744729622     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.25.w226     Document Type: Article

References (31)

1. S. Harrington and T. Miller, "Competitive Markets for Individual Health Insurance," Health Affairs 21 (2002): w359-w362 (published online 23 October 2002; 10.1377/hlthaff.w2.359).
2. M. McClellan and K. Baicker, "Reducing Uninsurance through the Nongroup Market: Health Insurance Credits and Purchasing Groups," Health Affairs 21 (2002): w363-w366 (published online 23 October 2002; 10.1377/hlthaff.w2.363).
3. K. Pollitz, "Can Access to Affordable Individual Health Insurance Be Sustained?" in State Health Insurance Market Reform: Toward Inclusive and Sustainable Health Insurance Markets, ed. A.C. Monheit and J.C. Cantor (New York: Routledge, 2004), 113-120.
4. M.B. Buntin et al., "Trends and Variability in Individual Insurance Products in California," Health Affairs 22 (2003): w449-w459 (published online 24 September 2003; 10.1377/hlthaff.w3.449). Insurance premiums might also be a large burden for low-income people in the group market if the employer share of premiums is borne by workers, as most economists believe.
5. M.V. Pauly and L.M. Nichols, "The Nongroup Health Insurance Market: Short on Facts, Long on Opinions and Policy Disputes," Health Affairs 21 (2002): w325-w344 (published online 23 October 2002; 10.1377/hlthaff.w2.325).
6. D.R. Kelch, "Rules Governing California's Individual Health Insurance Market," Issue Brief, April 2005, http://www.chcf.org/documents/ insurance/RulesGoverningCAIndividualInsuranceMarket.pdf (accessed 24 March 2006).
7. California HealthCare Foundation, California Employer Health Benefits Survey, 2004, http://www.chcf.org/documents/insurance/HRETEmployerBenefits2004. pdf (accessed 24 March 2006). The similarity of trends noted is for the group market; a comparison for the individual market is not available.
8. CHCF, "Snapshot: California's Uninsured," 2004, http://www.chcf.org/documents/insurance/UninsuredSnapshot2004.pdf (accessed 24 March 2006).
9. America's Health Insurance Plans, "Individual Health Insurance: A Comprehensive Survey of Affordability, Access, and Benefits," August 2005, http://www.ahipresearch.org/pdfs/Individual_Insurance_Survey_Report8-26-2005. pdf (accessed 24 March 2006). These lower premiums might reflect consumers' choices of plan types and benefits as well as differences in health care costs, demographics of purchasers, and regulatory factors affecting pricing.
10. The specific details of the estimation models and more detail about the methods can be found in the following papers: M.S. Marquis and M.B. Buntin, "How Much Risk Pooling Is There in the Individual Insurance Market?" Health Services Research (forthcoming);
11. M.S. Marquis et al., "Is the Individual Market More than a Bridge Market? An Analysis of Disenrollment Decisions," Inquiry 42, no. 4 (2005/06): 381-396;
12. M.S. Marquis et al., "Subsidies and the Demand for Individual Health Insurance in California," Health Services Research 39, no. 5 (2004): 1547-1570;
13. M.S. Marquis et al., "The Role of Product Design in the Demand for Individual Health Insurance" (Unpublished paper, RAND, January 2006);
14. and K. Kapur et al., "Individual Health Insurance within the Family: Can Subsidies Promote Family Coverage?" (Unpublished paper, RAND, January 2006).
15. This captures only preferences among benefit features and not other differences between plans, such as type of plan or service characteristics of the carrier. Moreover, to some extent, choice of plans could reflect ability to pay aswell as preferences for different features.
16. Buntin et al., "Trends and Variability."
17. J.R. Gabel, S.H. Long, and M.S. Marquis, "Employer-Sponsored Insurance: How Much Financial Protection Does It Provide?" Medical Care Research and Review 59, no. 4 (2002): 440-454.
18. J.R. Lave et al., "Changing the Employer-Sponsored Health Plan System: The Views of Employees in Large Firms," Health Affairs 18, no. 4 (1999): 112-117.
19. A.A. Gawande et al., "Does Dissatisfaction with Health Plans Stem from Having No Choices?" Health Affairs 17, no. 5 (1998): 184-194;
20. and B.S. Schone and P.F. Cooper, "Assessing the Impact of Health Plan Choice," Health Affairs 20, no. 1 (2001): 267-275.
21. E. Ziller et al., "Patterns of Individual Health Insurance Coverage, 1996-2000," Health Affairs 23, no. 6 (2004): 210-221.
22. The chronic conditions included in the measure are arthritis, cancer, diabetes, hypertension, heart disease, lung disease, back pain, and ulcers.
23. We would expect some risk pooling even if insurers endeavor to separate high and low risks, because insurers will attempt to refine risk classifications only if the benefits of so doing outweigh the costs.
24. High-risk purchasers are those with an adult family member with one of the chronic conditions listed in Note 17 or with a child with asthma, ear infections, hay fever, skin problems, or emotional problems. Chronic conditions were measured from claims data for all subscribers, and a treatment for the condition at any time during the first year was assumed to be a condition at enrollment; treatment for a condition occurring in subsequent years that was not treated in the first year was assumed to be the onset of a new condition. The difference in choice by health status controls for other factors that might influence plan preference, such as income and family structure.
25. We grouped all HMOs together because there are a limited number of different plans, and they all provide fairly similar benefits as measured by actuarial value. They will, however, differ in networks and might differ in the extent of medical management; preferences for these characteristics might also be related to health risk,
26. V. Patel and M.V. Pauly, "Guaranteed Renewability and the Problem of Risk Variation in Individual Health Insurance Markets," Health Affairs 21 (2002): w280-w289 (published online 23 October 2002; 10.1377/hlthaff.w2.289).
27. L.M. Nichols, "Myths about the Uninsured," Congressional Testimony before the House Ways and Means Subcommittee on Health, 9 March 2004, http://www.hschange.org/CONTENT/655/?words=Myths+About+the+Uninsured (accessed 24 March 2006).
28. The price response for the product depends on its original market share and the share of the market held by the carrier offering the product. For this and other estimates, we assumed that the product market share is 10 percent and the carrier share is 40 percent.
29. This and the following results are not shown in the exhibits. They can be found in Marquis et al., "The Role of Product Design."
30. This conclusion was also reached in M. Pauly and B. Herring, Pooling Health Insurance Risks (Washington: AEI Press, 1999).
31. K. Weismantel, "Covering the Uninsured: The Promise and Pitfalls of the Individual Medical Market," AHIP Coverage 45, no. 3 (2004): 32-33, 36-38.