Switching benefits and costs in competitive health insurance markets: A conceptual framework and empirical evidence from the Netherlands

Daniëlle M.I.D. Duijmelinck, Ilaria Mosca and Wynand P.M.M. van de Ven

Health Policy, 2015, vol. 119, issue 5, 664-671

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.

Keywords: Health insurance; Switching behaviour; Competitive insurance market; Switching costs; Switching benefits (search for similar items in EconPapers)
JEL-codes: D12 G22 I11 I13 I18 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:hepoli:v:119:y:2015:i:5:p:664-671

DOI: 10.1016/j.healthpol.2014.11.015

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