On Monday, December 9 2019, 14:00 - 15:30, Mujaheed Shaikh (Hertie School) will present:
Too Sticky to Switch? Retirement and Health Plan Choices of the Elderly
The success of managed competition in health insurance largely depends on consumer switching behavior. We study whether retirement influences health plan choices of the elderly by combining evidence from a regression discontinuity design exploiting the retirement legislation in Switzerland with structural results from a discrete choice modeling approach. We find that the elderly engage in premium targeting at retirement by actively switching to less generous health plans to offset the cessation of employer contributions. Moreover, we show that the elderly are significantly more likely to switch their insurance model and deductible as a response to a premium shock triggered by retirement. Besides a strong preference for the status quo plan, our structural results indicate that retirement reduces the willingness to pay for the default. Simulated by our findings, we then explore the implications of these for the Swiss health insurance marketplace and provide suggestive evidence of consumer sorting.
Room: WST-C.02.12, Weststadttürme Berliner Platz 6-8, Essen
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