publication . Preprint . 2013

Employer Contribution and Premium Growth in Health Insurance

Yiyan Liu; Ginger Zhe Jin;
Open Access
  • Published: 01 Dec 2013
We study whether employer premium contribution schemes could impact the pricing behavior of health plans and contribute to rising premiums. Using 1991-2011 data before and after a 1999 premium subsidy policy change in the Federal Employees Health Benefits Program (FEHBP), we find that the employer premium contribution scheme has a differential impact on health plan pricing based on two market incentives: 1) consumers are less price sensitive when they only need to pay part of the premium increase, and 2) each health plan has an incentive to increase the employer's premium contribution to that plan. Both incentives are found to contribute to premium growth. Count...
free text keywords: jel:H2, jel:I1, jel:L1

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