Health plan choice - Price elasticities in a managed competition setting

Using a unique panel dataset of health plan choices and personal characteri stics of employees at a single firm, this paper provides estimates of price elasticities Sor health insurance plans in a managed competition setting. Estimated price elasticities are larger in absolute value than most previou s estimates and the magnitude of the price elasticity suggests that there i s a place for price competition in this market. We also find evidence of tr ansition costs in switching health plans for older and less healthy employe es. Such differential responses to price may contribute to adverse selectio n in this market.