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Suboptimal provision of preventive healthcare due to expected enrollee turnover among private insurers

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  • Bradley Herring

Abstract

Many preventive healthcare procedures are widely recognized as cost‐effective but have relatively low utilization rates in the US. Because preventive care is a present‐period investment with a future‐period expected financial return, enrollee turnover among private insurers lowers the expected return of this investment. In this paper, I present a simple theoretical model to illustrate the suboptimal provision of preventive healthcare that results from insurers ‘free riding’ off of the provision from others. I also provide an empirical test of this hypothesis using data from the Community Tracking Study's Household Survey. I use lagged market‐level measures of employment‐induced insurer turnover to identify variation in insurers' expectations and test for the effect of turnover on several different measures of medical utilization. As expected, I find that turnover has a significantly negative effect on the utilization of preventive services and has no effect on the utilization of acute services used as a control. Copyright © 2009 John Wiley & Sons, Ltd.

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  • Bradley Herring, 2010. "Suboptimal provision of preventive healthcare due to expected enrollee turnover among private insurers," Health Economics, John Wiley & Sons, Ltd., vol. 19(4), pages 438-448, April.
    • Handle: RePEc:wly:hlthec:v:19:y:2010:i:4:p:438-448
    DOI: 10.1002/hec.1484
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    Cited by:

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    2. Mariana Carrera & Dana Goldman & Geoffrey Joyce, 2013. "Heterogeneity in Cost-Sharing and Cost-Sensitivity, and the Role of the Prescribing Physician," NBER Working Papers 19186, National Bureau of Economic Research, Inc.
    3. Hanming Fang & Alessandro Gavazza, 2011. "Dynamic Inefficiencies in an Employment-Based Health Insurance System: Theory and Evidence," American Economic Review, American Economic Association, vol. 101(7), pages 3047-3077, December.
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    6. Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Healthcare System," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 93-113, Fall.
    7. Wendy Xu & Bryan Dowd & Jean Abraham, 2016. "Lessons from state mandates of preventive cancer screenings," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(2), pages 203-215, March.
    8. Thomas C. Buchmueller & Alan C. Monheit, 2009. "Employer-Sponsored Health Insurance and the Promise of Health Insurance Reform," NBER Working Papers 14839, National Bureau of Economic Research, Inc.
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    10. Shiv Dixit, 2023. "Contract Enforcement and Preventive Healthcare: Theory and Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 1048-1094, December.

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