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Channeling Consumers to Preferred Providers and the Impact of Status Quo Bias: Does Type of Provider Matter?

Keywords: Managed competition; preferred provider choice; consumer channeling; status quo bias; discrete choice experiments

Context. To effectively bargain about the price and quality of health services, health insurers need to successfully channel their enrollees. Little is known about consumer sensitivity to different channeling incentives. In particular, the impact of status quo bias, which is expected to differ between different provider types, can play a large role in insurers' channeling ability.

Objective. To examine consumer sensitivity to channeling strategies and to analyze the impact of status quo bias for different provider types.

Data Sources/Study Design. With a large-scale discrete choice experiment, we investigate the impact of channeling incentives on choices for pharmacies and general practitioners (GPs). Survey data were obtained among a representative Dutch household panel (n=2,500).

Principal Findings. Negative financial incentives have a two to three times larger impact on provider choice than positive ones. Positive financial incentives have a relatively small impact on GP choice, while the impact of qualitative incentives is relatively large. Status quo bias has a large impact on provider choice, which is more prominent in the case of GPs than in the case of pharmacies.

Conclusion. The large impact of the status quo bias makes channeling consumers away from their current providers a daunting task, particularly in the case of GPs.

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