Suboptimal provision of preventive healthcare due to expected enrollee turnover among private insurers
✍ Scribed by Bradley Herring
- Publisher
- John Wiley and Sons
- Year
- 2010
- Tongue
- English
- Weight
- 122 KB
- Volume
- 19
- Category
- Article
- ISSN
- 1057-9230
- DOI
- 10.1002/hec.1484
No coin nor oath required. For personal study only.
✦ Synopsis
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.