Health Economics Commons^™

The Price Sensitivity Of Medicare Beneficiaries: A Regression Discontinuity Approach., Thomas Buchmueller, Kyle Grazier, Richard Hirth, Edward Okeke

Edward Okeke

We use 4 years of data from the retiree health benefits program of the University of Michigan to estimate the effect of price on the health plan choices of Medicare beneficiaries. During the period of our analysis, changes in the University's premium contribution rules led to substantial price changes. A key feature of this ‘natural experiment’ is that individuals who had retired before a certain date were exempted from having to pay any premium contributions. This ‘grandfathering’ creates quasi-experimental variation that is ideal for estimating the effect of price. Using regression discontinuity methods, we compare the plan choices of individuals …

What Is The Price Of Prevention? New Evidence From A Field Experiment., Edward Okeke, Akinfolarin Adepiti, Kayode Ajenifuja

Edward Okeke

Workers On The Margin: Who Drops Health Coverage When Prices Rise?, Edward Okeke, Richard Hirth, Kyle Grazier

Edward Okeke

We revisit the question of price elasticity of employer-sponsored insurance (ESI) take-up by directly examining changes in the take-up of ESI at a large firm in response to exogenous changes in employee premium contributions. We find that, on average, a 10% increase in the employee’s out-of-pocket premium increases the probability of dropping coverage by approximately 1%. More importantly, we find heterogeneous impacts: married workers are much more price-sensitive than single employees, and lower-paid workers are disproportionately more likely to drop coverage than higher-paid workers. Elasticity estimates for employees below the 25th percentile of salary distribution in our sample are nearly …

Insurer Competitive Strategy And Enrollment In Newly Offered Preferred Provider Organizations (Ppo), Richard Hirth, Kyle Grazier, Michael Chernew, Edward Okeke

Edward Okeke

While early PPO growth coincided with growth of managed care generally, recent growth has come primarily at the expense of other managed care plans. Little is known about the micro behavior underlying these trends. In 2005, University of Michigan employees were offered PPOs for the first time by vendors who also offered other plans. PPOs helped the offering vendors maintain or grow their total enrollment share. PPOs were most attractive to workers who had previously chosen less managed plans. Because PPOs drew few enrollees from HMOs, there was little evidence of a backlash against managed care in the context of …