Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
How can health insurers influence provider choice? Evidence of a Discrete Choice Experiment
Rationale: Insurers' ability to channel consumers toward preferred providers is an important determinant of their bargaining power. Health insurers can restrict provider choice ex-ante to a limited provider network or offer free choice of provider and influence provider choice ex-post. Little is known about the type and effectiveness of ex-post strategies health insurers can use.
Objective: The goal of this paper is to estimate to what extent consumers are responsive to different ex-post channeling incentives and to what extent the effect of these incentives is reduced by a status-quo bias in decision-making.
Data and Method: We estimated the consumers' sensitivity to various channeling mechanisms with a discrete choice experiment. Respondents were confronted with choices between hypothetical scenarios of both general practitioners and pharmacies, each having different attributes such as service and quality aspects, location (travel time) and price. Half of the respondents were confronted with a positive price (co-payment) and half of them with a negative price (bonus). In addition, we examined the existence of a status-quo bias by asking respondents to choose between their current provider and a hypothetical provider. We calculated the willingness to pay (WTP) for the different provider attributes by using both the traditional marginal rates of substitution method, and the compensating variation method.
The data were collected using an Internet based household panel (N= 2000) that is a representative sample of the Dutch population. The response rate equaled about 80%. The data were collected in July 2007.
Results and Conclusion: We find that negative financial incentives are a more effective channeling device than positive financial incentives. We also find evidence of a substantial status-quo bias, which may limit the effectiveness of ex-post channeling in the short term. The status-quo bias is larger for the choice of a general practitioner than for the choice of pharmacies. The long-term relationship with a general practitioner seems more important than that with the pharmacy. In the long run, however, the status-quo bias is likely to wear off because consumers may move to a different area and because they adapt to the new situation in which channeling mechanisms are more widely used and accepted. Furthermore, we find that the method of marginal rates of substitution tends to overestimate the willingness-to-pay for preferred provider attributes, since the compensating variation method yields much lower WTP values.