Consumer price sensitivity in health insurance

Machiel van Dijk, Marc Pomp and Rudy Douven ()
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Rudy Douven: CPB Netherlands Bureau for Economic Policy Analysis

No 56, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: This CPB Discussion Paper presents new estimates for the price elasticity of the residual demand for health insurance. This elasticity measures the loss in market share of a health insurer as a consequence of a unilateral increase in price, assuming other firms keep their prices constant. The main findings are as follows: the price elasticity of residual demand for social health insurance by enrollees was very low during the period 1996-2002. We find small but significant effects of the price of basic insurance but no robust effect of the price of supplementary insurance. Young enrollees are more price sensitive than older enrollees. However, these findings are conditional on the limited variation in price observed in our data. At larger price differentials, the elasticity may well be higher. This Discussion Paper is based on joint work of Machiel van Dijk, Marc Pomp, Rudy Douven (all three at CPB), Trea Laske-Aldershof, Erik Schut (both Erasmus University), Willem de Boer and Anne de Boo (Vektis). We would like to thank Marieke Smit (Vektis) for her help in getting this project off the ground. We would also like to thank Katie Carman (Tilburg University) for her comments on a previous draft of this paper.

JEL-codes: D12 I11 I18 L11 (search for similar items in EconPapers)
Date: 2006-02
New Economics Papers: this item is included in nep-hea and nep-ias
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:56

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