What are the factors that influence whether or not an individual switches health plans? Of course there are many, chief among them premium and benefits. Yet, controlling for those factors there is one other that is significant: age. Older individuals are much less likely to switch plans (or, perhaps, to switch anything) than younger individuals. This posts summarizes two papers that provide supporting evidence for this age effect.
Atherly, Florence, and Thorp (AFT) examine health plan switching in the Federal Employees Health Benefits Program (FEHBP). Among other things, the authors examine the effects of age on switching patterns finding that as workers age they are less likely to switch. Moreover, this effect is not due to decreasing sensitivity to premiums with age. Instead, the authors write, older works switch at lower rates due other costs of transition. For example, older workers may find it relatively more disruptive than younger workers to reestablish provider relationships within a new plan. (Atherly A, Florence C, Thorp K. (2005). Health Plan Switching Among Members of the Federal Employees Health Benefits Program. Inquiry 42: 255–265 (Fall 2005).)
The AFT findings differ from those of prior studies, such as that by Stromborn, Buchmueller, and Feldstein (SBF). Using University of California health benefits data, SBF also find that older workers are less likely to switch plans. But in contrast to AFT’s results they find that older workers are less price sensitive than younger ones. "Controlling for health status and job tenure, elasticities for employees age 30 and under are roughly twice the magnitude of elasticities for employees over age 45." (Strombom B, Buchmueller T, Feldstein P. (2002). Switching Costs, Price Sensitivity and Health Plan Choice. Journal of Health Economics 21: 89–116.)
Both the AFT and SBF papers cite a substantial body of literature that supports the notion that older individuals are less likely to switch health plans. This much is clear. However, the studies differ in their assignment of the cause. Is it age-related changes in price sensitivity or age-related changes in transaction costs? Likely it is some of both.