What are consumers willing to pay for a broad network health plan?: Evidence from covered California.

07:00 EST 21st December 2018 | BioPortfolio

Summary of "What are consumers willing to pay for a broad network health plan?: Evidence from covered California."

Health Insurance Marketplaces have received considerable attention for their narrow network health plans. Yet, little is known about consumer tastes for network breadth and how they affect plan selection. I estimate demand for health plans in California's Marketplace, Covered California. Using 2017 individual enrollment data and provider network directories, I develop a geospatial measure of network breadth that reflects the physical locations of households and network providers. I find that households are sensitive to network breath in their plan choices. Mean willingness to pay for a broad network plan relative to a narrow network plan, defined as a two standard deviation, 17.44 percentage point increase in network breadth, is $45.83 in post-subsidy monthly premiums. Variation in WTP indicates a selection mechanism exists whereby older households sort into broader network plans. I also find that households are highly premium sensitive, which may be a result of plan standardization in Covered California.


Journal Details

This article was published in the following journal.

Name: Journal of health economics
ISSN: 1879-1646
Pages: 63-77


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