Health insurance menu design for large employers

Kate Ho and Robin Lee

RAND Journal of Economics, 2023, vol. 54, issue 4, 598-637

Abstract: We provide a framework for large employers designing a menu of health plan offerings that differ on both financial and nonfinancial dimensions. Using administrative data from Harvard University, we estimate a model of plan choice and utilization, and evaluate the benefits of cost sharing and plan variety. For this population of consumers, and a single plan with a generous out‐of‐pocket maximum and zero deductible, modest cost sharing of approximately 30% maximizes average employee surplus. Gains from offering choice are meaningful only if financial differentiation is paired with differentiation along other dimensions where consumer preferences are correlated with efficient coverage levels.

Date: 2023
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https://doi.org/10.1111/1756-2171.12452

Related works:
Working Paper: Health Insurance Menu Design for Large Employers (2021)
Working Paper: Health Insurance Menu Design for Large Employers (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:randje:v:54:y:2023:i:4:p:598-637

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