The impact of subsidies on deductible choice in health insurance
Awards: SCOR-EGRIE Young Economist Best Paper Award Winner (EGRIE); S.S. Huebner Foundation Fellowship/ARIA Award for 3MT presentation (ARIA)
(draft available upon request)
Abstract: Premium subsidies increase insurance coverage through two main channels: the income effect, which increases disposable income and subsequently increases insurance coverage, and the substitution effect, which changes the relative price of insurance, making more generous insurance plans more attractive. Previous literature assumes that the income effect is small, but this paper shows that the income effect is substantial and consequential. Subsidies increase insurance coverage by 20 percentage points, with 40% of this increase attributable to the income effect. Additionally, the increased coverage leads to higher healthcare expenditures among recipients, as marginal enrollees increase their medical spending from CHF 1,109 to CHF 5,687. These findings indicate that price change direction, in addition to price differences, plays a critical role when applying price elasticity in welfare evaluations.
Magnitude and social correlates of poor decisions in health insurance (access to online poster, video presentation, working paper)
with Christian Biener (R&R at Journal of Public Economics) (Previously titled "Determinants and Consequence of Poor Decisions in Health Insurance ")
Abstract: Existing research documents that consumers frequently make mistakes in health insurance markets, leading to price distortions and inefficient resource allocation. However, less attention is paid to how such mistakes contribute to health inequality, particularly when economically disadvantaged populations are more likely to make poor decisions. This study examines the distribution of choice quality in the Swiss health insurance market, using two sets of administrative linked survey data. We find that economically disadvantaged populations—those with lower incomes and less education—are significantly more likely to choose higher-coverage plans that are suboptimal given their health risks. Specifically, 49 percent of the population chooses plans that result in financial losses, with average foregone savings ranging from CHF 382 to CHF 457 annually. These suboptimal choices contribute to widening disparities in financial well-being.
conferences and seminars: American Risk and Insurance Association Annual Meeting (ARIA), 2019; Asia-Pacific Risk and Insurance Association Annual Conference (APRIA), 2019; Swiss Young Economist Meeting, 2021; ASSA, ASHEcon, Renmin University, Royal Economic Society, University College London, and University of St.Gallen.
2. What do consumers do when they select health insurance plans?
with Chenyuan Liu (draft upon request)
Christian Biener and Lan Zou. 2024. More options, more problems? Lost in the health insurance maze. Journal of Risk and Insurance (Feb 2024).
[published version] [Working paper version]
Xu, Jiahua and Zou, Lan (2019). The Impact of CEO Pay and its Disclosure on Stock Price Crash Risk: Evidence from China. China Finance Review International,9(4):479-497.
Christian Biener, Aline Waeber and Lan Zou (2019). Heterogeneity in Behavioral Biases: A Review of the Literature. [Swiss Re Commissioned Study]
Co-Principal Investigator, Swiss National Science Foundation Project Funding (Nr. 10001_219592) Insuring Health: Individual Decision-Making and Insurer Competition" (2023 - 2026, USD 388,222)
09/2022 SCOR-EGRIE Young Economist Best Paper Award Winner (EGRIE); EURO 2,000
08/2022 S.S. Huebner Foundation Fellowship/ARIA Award for 3MT presentation (ARIA)
08/2019 Kyobo Life Travel Scholarship (APRIA); USD 500
2023
Invited Talk Guest lecture (Why Insurance Markets Fail: Unraveling the Selection Dilemma) for Master course "Insurance Theory and Practice" at Peking
University, China.
Conferences Annual Meeting of the American Risk and Insurance Association (ARIA); American Society of Health Economics Conference (ASHEcon).
2022
Invited Talk Invited Seminar University College London(UCL), UK;
Invited workshop at Central University of China, Virtual;
Invited 2nd SFRUC workshop on Behavioral Insurance at Renmin University, China, Virtual.
Conferences Public economic seminar London School of Economics (LSE); American Society of Health Economics Conference (ASHEcon); 49th Seminar of the European
Group of Risk and Insurance Economists (EGRIE); Annual Meeting of the American Risk and Insurance Association (ARIA); Royal Economic Society Annual
Conference (RES); European Health Economic Conference (EuHea); Asia-Pacific Risk and Insurance Association Meeting (APRIA); CEAR/MRIC Behavioral
Insurance Workshop; American Economic Association Annual Meeting (AEA/ASSA); Swiss Society of Economics and Statistics Annual Congress (SSES).
2021
Conferences Annual Meeting of the American Risk and Insurance Association (ARIA), Young Swiss Economists Meeting.
2020
Conferences World Risk and Insurance Economics Congress (WRIEC).
2019
Conferences Annual Meeting of the American Risk and Insurance Association (ARIA); Asia-Pacific Risk and Insurance Association Annual Meeting (APRIA).