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Switching rates in health insurance markets decrease with age: empirical evidence and policy implications from the Netherlands

Published online by Cambridge University Press:  15 July 2015

Daniëlle M.I.D. Duijmelinck  and
Wynand P.M.M. van de Ven
Daniëlle M.I.D. Duijmelinck*
Affiliation:
Institute of Health Policy and Management, Erasmus University Rotterdam, Rotterdam, the Netherlands
Wynand P.M.M. van de Ven
Affiliation:
Institute of Health Policy and Management, Erasmus University Rotterdam, Rotterdam, the Netherlands
*
*Correspondence to: Daniëlle M.I.D. Duijmelinck, Institute of Health Policy and Management, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, the Netherlands. Email: [email protected]
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Abstract

All consumer groups with specific preferences must feel free to easily switch insurer in order to discipline insurers to be responsive to consumers’ heterogeneous preferences. This paper provides insight into the switching behaviour of low-risks (i.e. young or healthy consumers) and high-risks (i.e. elderly or unhealthy consumers) in the Netherlands in the period 2009–2012. We analysed: (1) administrative data with objective health status information (i.e. medically diagnosed diseases and pharmaceutical use) and information on health care expenses of nearly the entire Dutch population (n=15.3 million individuals) and (2) three-year sample data (n=1152 individuals). Our findings indicate that switching rates strongly decrease with age. For example, in 2009, consumers aged 25–44 switched 10 times more than consumers aged 75 or older. Another finding is that switching rates decrease as the predicted health care expenses increase. Although healthy consumers switch twice as much as unhealthy consumers, this difference becomes much smaller after adjusting for age. We conclude that our findings can be explained by higher perceived switching costs by elderly consumers than by young consumers. Consequently, insurers have low incentives to act as quality-conscious purchasers of care for the elderly consumers. Therefore, strategies should be developed to increase the choice of insurer of elderly consumers.

JEL classification

I18: Government Policy • Regulation • Public Health G22: Insurance • Insurance Companies • Actuarial Studies I11: Analysis of Health Care Markets I13: Health Insurance, Public and Private
Type
Articles
Information
Health Economics, Policy and Law , Volume 11 , Issue 2 , April 2016 , pp. 141 - 159
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Copyright
© Cambridge University Press 2015 

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