Incentivizing Enrollment: A Study of Employee Enrollment in Health Insurance

Birol, Margo

Incentivizing Enrollment: A Study of Employee Enrollment in Health Insurance

Persistent URL

http://hdl.handle.net/10456/45962

Author(s)

Birol, Margo

Date Issued

April 6, 2018

Abstract

The health insurance industry has seen a spike in coverage costs over the last decade. To compensate for increasing expenses, firms have begun to offer additional, more financially sustainable plans. Specifically, firms have started to utilize High Deductible Health Plans to increase risk protection and decrease expenditures. Under the assumption that consumers are rational decision makers, lower price points are associated with an increase in quantity demanded. To incentivize enrollment, firms participate in cost sharing models to reduce employee expenditures. Sorting issues arise due to asymmetrical information and consequently adverse selection and moral hazard occur. Results from this project provide insight into consumer priorities, and in turn offer plans that are more desirable for employees and more cost-effective for employers. Employer cost sharing rates and upfront costs have a significant impact on an employee’s decision to opt into the default Preferred Provider Organization health plan rather than the newly available High Deductible Health Plan.

Major

Economics

Honors

Economics, 2018

First Reader(s)

Nonnenmacher, Tomas W.