Suboptimal provision of preventive healthcare due to expected enrollee turnover among private insurers
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.
Year of publication: |
2010
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Authors: | Herring, Bradley |
Published in: |
Health Economics. - John Wiley & Sons, Ltd., ISSN 1057-9230. - Vol. 19.2010, 4, p. 438-448
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Publisher: |
John Wiley & Sons, Ltd. |
Saved in:
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