According to a study by the University of Michigan, even a $10 raise in premiums can lead people to a different health care plan. That’s positive news for health care reforms which greatly depends on competition and consumer response to pricing. The study was based on Medicare population. Younger people who do not qualify for Medicare Plan are even more likely to shop around if prices or premiums in benefit plans increase, according to Richard Hirth, professor at the UM School of Public Health and study co-author.
The health CARE reform, officially called the Patient Protection and Affordable Care Act, allows people to choose from a menu of health plans offered in their state’s insurance exchange. The study findings hold that insurers might have to price premiums very competitively to entice plan participants.
Researchers established that large price increases could considerably reduce a plan’s market share. For UM retirees, researchers found that only a $10 increase in premiums led to a 2 to 3 percent decrease in a plan’s market share.
Researchers examined four years of data around the cut-off date for facing the new premiums and found that many UM retirees who chose the most costly and flexible plan when they didn’t have premiums chose less comprehensive and less expensive coverage when faced with premiums.
The UM retiree benefit plans are supplemental to Medicare Plan and cover costs that Medicare does not, such as deductibles, co-payments and prescription medicines.
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