Health Insurance Menu Design for Large Employers
We provide a framework for large employers designing a menu of health plan offerings that differ on both financial and non-financial dimensions. Using detailed administrative data from Harvard University, we estimate a model of plan choice and utilization, and evaluate the benefits of cost sharing and plan variety. For this population of employed consumers, and a single plan with a generous out-of-pocket maximum and zero deductible, we find that modest cost sharing of approximately 30% maximizes average employee surplus. Further gains from offering choice are limited if based solely on financial characteristics, but can be meaningful if paired with differentiation along other dimensions where consumer preferences are correlated with efficient coverage levels.
Published Versions
Kate Ho & Robin S. Lee, 2023. "Health insurance menu design for large employers," The RAND Journal of Economics, vol 54(4), pages 598-637. citation courtesy of 
Related
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
