Unbiased Analysis of Today's Healthcare Issues
In 2010, Premera Blue Cross (Premera), a large nonprofit health plan in the Pacific Northwest implemented a value-based formulary design for its beneficiaries. In essence, enrollees could purchase high-value treatments for low copayments and low-value treatments for higher copayments. Can we use this change from more standard to value-base formulary designs to estimate the price elasticity…
How does the price of health insurance affect the probability that a firm will offer health insurance to their workers? A previous post provides a variety of estimates of the elasticity of firm health insurance offering with respect to premiums. A more recent article by Gruber and Lettau (2004) needs to be added to this…
Price elasticity estimates how consumer demand changes as prices change. For instance, the price elasticity of medical service is defined as the percentage change in quantity of medical care demanded divided by the percentage change in price of the same commodity. Most academics believe that the price elasticity for medical services is between 0 and…
Most experts believe that health care demand is fairly inelastic. If you are sick, you will not be very price sensitive. There are exceptions to this rule (e.g., elective surgery such as plastic surgery, purchases of eyeglasses) but most studies find that patients are fairly insensitive to changes in health care prices. For instance, the…