An Empirical Investigation of Employee Health Plan Choice and Switching Behavior Under Managed Competition

How do consumers choose among competing health plans in a managed competition setting? The researchers conducted five related empirical studies analyzing a data set compiled from the health benefits program of the University of California (UC). This data set consists of five years (1992 to 1996) of open enrollment choices for over 100,000 UC employees and retirees. The researchers: 1) extended and refined their previous analysis of the effect of price on switching among health plans; 2) investigated the implications of overlapping provider panels for patterns of health plan switching; 3) examined the factors affecting the health plan choices and switching decisions of more than 30,000 retirees receiving health benefits from the UC; 4) examined the health plan switching decisions of individuals with serious health conditions; and 5) examined the relationship between various satisfaction measures and plan switching. The objective of this study was to better inform policymakers about how consumers make choices among competing health plans.