Presentation Peru

8/13/2019 Presentation Peru

1/27

Exogenous shocks effects on health plan choice switching

Fabian Duarte Yuri Plasencia

Universidad de Chile

23 de octubre de 2013

Fabian Duarte, Yuri Plasencia (Universidad de Chile)Exogenous shocks effects on health plan choice switching

23 de octubre de 2013 1 / 21


2/27

Outline

1 Introduction

2 Health Insurance System

3 Literature Review

4 Results

5 Conclusions


23 de octubre de 2013 2 / 21


3/27

Introduction

1 Many countries are trying to improve their health care systems, introducingnew reforms or changing the current policies. In order to understand howthese changes affect an individuals decision on several dimensions. How theydecide which insurance plan to purchase, and how different health shocks or

labor shocks affect their decision to switch.2 This paper analyzes switching behavior for health insurance in the Chilean

health care system. The decision to switch depends not only on thecharacteristics of individuals and plans, but also on exogenous health or laborshocks (Policy implications).

3 cost of switching from the public insurer to a private insurance plan can bevery high on multiple dimensions.


23 de octubre de 2013 3 / 21


4/27

Introduction

4 Several studies have examined switching decisions in health insurancemarkets (Bansak and Raphael, 2006; Cutler and Gruber, 1996; Kronick,2002). However, to our knowledge, none of the existing literature hasexplored how a public health insurance option affects choice in a competitivehealth insurance market, how regulations regarding pre-existing conditions

affect switching, or how labor shocks enter into the decision to switch.5 The purposes of this study are twofold. First, to give a detailed picture of the

difference and similitude between people that stay and switch systems.Second, to understand the determinants of individual health plan switchingbehavior when a public option is available, to analyze the effects of labor

shocks on switching behavior in a competitive non-employer based insurancemarket, and to measure the impact of pre-existing conditions on switchingwhen insurers can take this into consideration in their decisions about whomto insure.

Fabian Duarte, Yuri Plasencia (Universidad de Chile)Exogenous shocks effects on health plan choice switching 23 de octubre de 2013 4 / 21


5/27

Chilean Health Insurance System

1 Health insurance in Chile is either private or public and it is mandatory for

salaried workers and retirees. They have to spend at least 7 % of their taxableincome each year on health insurance premiums (FONASA,1 andISAPRES,13)



6/27


7/27

Chilean Health Insurance System

Cuadro :Characteristics of the private health insurance market (2008)

Market Share Expenditure Advertising

Open Isapres

Colmena 14.87 % 118.7 0.83

Normedica 2.34 % 9.27 0.09Cruz Blanca S.A. 18.20 % 114.3 1.30Vida Tres 4.91 % 47.15 0.10Ferrosalud 0.74 % 2.80Masvida S.A. 10.71 % 51.69 1.92Isapre Banmedica 21.00 % 130.0 0.32Consalud S.A. 23.15 % 99.45 0.45

Closed Isapres

San Lorenzo 0.18 % 0.83 0.002Fusat Ltda. 1.29 % 17.14Chuquicamata 1.32 % 7.39Rio Blanco 0.23 % 5.25Isapre Fundacion 0.93 % 7.86 0.004Cruz del Norte 0.14 % 1.03

September 2008.Health Expenditure. In thousand of dollars, September 2008.



8/27

Literature Review

1 Buchmueller and Feldstein (1996) used premium as the main variableexplaining switching, they found that individuals are highly responsive tochanges in premium (UCLA).

2 Strombom (2002) showed that there is substantial variation in pricesensitivity related to expected health costs. They found that younger,healthier employees are between two and four times more sensitive to pricethan employees who are older and who have been recently hospitalized ordiagnosed with cancer.

3 Tchernis and Newhouse (2006) show that those who switch to a lessgenerous plan exhibit lower medical spending prior to the switch; those whoswitch to a more generous plan exhibit higher medical spending and delaytheir spending until after the switch.



9/27

Literature Review

1 Altman and Zeckhauser (1998) used data on plan enrollment and utilizationfor individuals insured by the Group Insurance Commission of Massachusettsto analyze the factors that account for differences in plan premiums and totest for the presence of adverse selection or adverse retention.

2 Beaulieu (2002) analyzed plan switching behavior using a panel data ofHarvard employees from 1994-1997. She suggested that the provision ofinformation on quality had a small, but significant effect on consumer planchoices.

3 Pardo and Schott (2010) use data from the Social Protection Survey forChile to model health insurance choice as a dynamic stochastic process. Inthismodel, individuals consider premiums, expected out-of-pocket costs andpreferences.



10/27

Data: Descriptive statistics

Cuadro :Summary statistics Panel EPS 2004-2006

Public Private Total

Age 47.6 41.1 46.8Female 47.8 % 37.4 % 46.6 %Monthly salary $230.4 $1,470.1 $374.6Total dependents 0.909 1.214 0.945Monthly premium $16.13 $86.17 $24.27Living in Santiago 32.8 % 49.8 % 34.7 %College educated 10.2 % 55.2 % 15.4 %Health Status 2004 13.4 % 26.6 % 14.9 %Health Status 2009 13.6 % 28.2 % 15.3 %Surgery 2004 3.9 % 6.2 % 4.2 %Surgery 2009 7.3 % 9.6 % 7.6 %Freq. doctor visits 2004 1.074 1.007 1.067Freq. doctor visits 2009 2.090 1.971 2.076Freq. test 2004 0.455 0.626 0.475

Freq. tests 2009 1.176 1.385 1.200

Proportion of people who answered verygood or excellent in each year. The other alternativeswere good, regular, bad and very bad.



11/27

Data: Staying and Switching in the Public System

Cuadro :Summary Statistics Switch vs Stay

Stay Group Switch group(Mean) (Mean)

Age 47.48 36.12Total dependents 0.916 1.059Education 0.107 0.526

Monthly salary $237.2 $1,591.6Monthly premium $16.88 $67.78Freq. doctor visits 2004 1.066 0.873Freq. test 2004 0.455 0.489Freq surgeries 2004 0.054 0.043Freq. hospital visits 2004 0.100 0.038Freq. doctor visits 2009 2.077 1.739Freq. test 2009 1.170 1.257Freq. surgeries 2009 0.111 0.105Freq. hospital visits 2009 0.195 0.162Illness 0.310 0.126

Health Status 2004 0.615 0.865

Dummy of more than high school education.Dummy variable.



12/27

Data: Staying and Switching in the Private System

Cuadro :Summary Statistics Private Policyholders

Stay Group Switch Group(Mean) (Mean)

Age 42.65 39.20Total dependents 1.226 1.198Education 0.602 0.490

Monthly salary $1,554.2 $1,365.9Monthly premium $99.02 $70.27Freq. doctor visits 2004 1.026 0.982Freq. test 2004 0.716 0.514Freq surgeries 2004 0.086 0.052Freq. hospital visits 2004 0.077 0.074Freq. doctor visits 2009 2.288 1.578Freq. test 2009 1.532 1.202Freq. surgeries 2009 0.144 0.097Freq. hospital visits 2009 0.168 0.150Illness 0.213 0.167

Health Status 2004 0.850 0.861

Dummy of more than high school education.Dummy variable.



13/27


14/27

Empirical analysis of switching

1 Buchmueller and Feldstein (1996) used premium as the main variableexplaining switching while Tchernis and Newhouse (2006) used measures ofmedical usage to explain switching.

2 However, recently Pardo and Schott (2013) analyze the determinants ofhealth insurance selection between private an public system by individuals inChile, controlling by a set of individual observed and unobservedcharacteristics.



15/27

Results: Switching from Public to Private Plans

Cuadro :Survival function estimation

Switching from Public to private

VARIABLES sw pub pri

salary -3.43e-10

(1.17e-09)get a job -0.200***

(0.0236)lose a job -0.0190

(0.0233)lag2 getajob -0.199***

(0.0248)dumm illness -0.115***

(0.00378)freq doctor visits2004 0.00132***

(0.000341)Observations 332,316



16/27

R l S i hi f d B P i Pl


17/27

Results: Switching from, and Between, Private Plans

Cuadro :Survival function estimation

Switching from Private

VARIABLES Public Private

salary 6.84e-10 1.40e-07***(7.97e-10) (1.95e-08)

lose a job -0.178*(0.1000)

lag1 loseajob -0.301***(0.101)

dumm uni on 0.0451***(0.0143)

dum working -0.0688*** -0.0468**(0.0207) (0.0198)

dumm i ll ness -0.0972*** -0.0923***(0.0166) (0.0165)

lag1 dum monthpay -0.0196 -0.0459*(0.0262) (0.0262)

lag2 dum monthpay -0.0369 -0.0486*(0.0266) (0.0267)

tenureplan -7.79e-05 0.000125(0.000108) (0.000110)

age -0.00327*** -0.00274***

(0.000575) (0.000576)savings amt 6.92e-11 -5.26e-11

(2.45e-10) (2.47e-10)school ab ove secondary lvl 0.00583 -0.000361

(0.0123) (0.0122)delta health -0.00854 -0.0115

(0.00872) (0.00874)freq doctor visits2004 0.000254 0.000862

(0.00153) (0.00154)total premium -2.00e-06***

(2.79e-07)Observations 28,560 28,560



18/27


19/27

1 Conclusions and looking ahead


C l i


20/27

Conclusions

Switching behavior is driven by multiple factors that vary depending on theindividual and the plans offered.


C l i


21/27

Conclusions


In Chile, the relative importance of the variables is influenced by the structure of

the insurance market and by regulations.


Conclusions


22/27

Conclusions




The public option works as a safety net for individuals losing their jobs.


Conclusions


23/27

Conclusions





Regulations on pre-existing conditions affect the utility of individuals.


Conclusions


24/27

Conclusions





Regulations on pre-existing conditions affect the utility of individuals.

It is not clear that allowing individuals to switch could increase or decrease costs.


Looking ahead


25/27

Looking ahead

Study with more detail switching behavior



26/27

Looking ahead


27/27

Looking ahead

Study with more detail switching behavior

It is better to work with administrative records and link those records with labor

history and health care history. Self-report issues!

It is necessary to study consumer behavior in the private health insurance marketto understand to which plans individuals switched.


Presentation Peru

Documents

Transcript of Presentation Peru