In absolute or relative terms? How framing prices affects the consumer price sensitivity of health plan choice

Nicolas Ziebarth () and Hendrik Schmitz

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: This paper provides field evidence on (a) how price framing affects consumers’ decision to switch health insurance plans and (b) how the price elasticity of demand for health insurance can be influenced by policymakers through simple regulatory efforts. In 2009, in order to foster competition among health insurance companies, German federal regulation required health insurance companies to express price differences between health plans in absolute Euro values rather than percentage point payroll tax differences. Using individuallevel panel data, as well as aggregated health plan-level panel data, we find that the reform led to a sixfold increase in an individual’s switching probability and a threefold demand elasticity increase.

Keywords: health insurance; health plan switching; price competition; price elasticity; SOEP (search for similar items in EconPapers)
JEL-codes: H51 I11 I18 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-ias
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Related works:
Working Paper: In Absolute or Relative Terms?: How Framing Prices Affects the Consumer Price Sensitivity of Health Plan Choice (2011)
Working Paper: In Absolute or Relative Terms? How Framing Prices Affects the Consumer Price Sensitivity of Health Plan Choice (2011)
Working Paper: In Absolute or Relative Terms? How Framing Prices Affects the Consumer Price Sensitivity of Health Plan Choice (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:hectdg:12/03

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