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Switching benefits and costs in the Irish health insurance market: an analysis of consumer surveys

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Abstract

Relatively little analysis has taken place internationally on the consumer-reported benefits and costs to switching insurer in multi-payer health insurance markets. Ideally, consumers should be willing to switch out of consideration for price and quality and switching should be able to take place without incurring significant switching costs. Costs to switching come in many forms and understanding the nature of these costs is necessary if policy interventions to improve market competition are to be successful. This study utilises data from consumer surveys of the Irish health insurance market collected between 2009 and 2013 (N \(=\) 1703) to examine consumer-reported benefits and costs to switching insurer. Probit regression models are specified to examine the relationship between consumer characteristics and reported switching costs, and switching behaviour, respectively. Overall evidence suggests that switchers in the Irish market mainly did so out of consideration for price. Transaction cost was the most common switching cost identified, reported by just under 1 in 7 non-switchers. Psychological switching costs may also be impacting behaviour. Moreover, high-risk individuals were more likely to experience switching costs and this was reflected in actual switching behaviour. A recent information campaign launched by the market regulator may prove beneficial in reducing perceived transaction costs in the market, however, a more focused campaign aimed at high-risk consumers may be necessary to reduce inequalities. Policy-makers should also consider the impact insurer behaviour may have on decision-making.

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Notes

  1. One notable exception is the Israeli health insurance system where switching is found to be an inferior good—those with higher labour-income were found to be less likely to switch (Shmueli et al. 2007).

  2. This relates to multi-occupancy private rooms.

  3. However, since January 2014 it can also take place in a ward setting in public hospitals.

  4. While risk equalisation had previously been introduced to the market in 2003, payments never actually took place due to a successful legal challenge taken by a former market insurer (BUPA) (Turner and Shinnick 2013).

  5. This is a derived variable calculated by combining information on switching and consumers’ length of time with their current insurer.

  6. As the number of switchers was low, it was not possible to perform reliable regression analysis to see if responses related to reasons for switching differed between groups.

  7. Disinterest in plan comparison for very sick individuals could also be related to perceived high opportunity costs of time (i.e. a short life expectancy). In such instances, apathy may be considered a rational response, as it may not be in these individuals’ interests to spend time comparing health insurance products.

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Acknowledgements

The authors would like to thank the HIA for access to their consumer survey data. This research was funded by the Health Research Board PHD/2007/16.

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Authors and Affiliations

  1. Economic and Social Research Institute, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2, Ireland

    Conor Keegan

  2. Health Information and Quality Authority, Dublin 7, Ireland

    Conor Teljeur

  3. School of Economics, University College Cork, Cork, Ireland

    Brian Turner

  4. Centre for Health Policy and Management, Trinity College Dublin, Dublin 2, Ireland

    Steve Thomas

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  1. Conor Keegan
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Correspondence to Conor Keegan.

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Keegan, C., Teljeur, C., Turner, B. et al. Switching benefits and costs in the Irish health insurance market: an analysis of consumer surveys. Int J Health Econ Manag. 19, 15–32 (2019). https://doi.org/10.1007/s10754-018-9244-1

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