Premium
Why do employees keep choosing the high‐premium health care plan? An investigation of the financial consequences and logic of employee health care plan selections
Author(s) -
Sturman Michael C.,
Boudreau John W.,
Corcoran Richard J.
Publication year - 1996
Publication title -
human resource management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.888
H-Index - 94
eISSN - 1099-050X
pISSN - 0090-4848
DOI - 10.1002/(sici)1099-050x(199623)35:3<317::aid-hrm3>3.0.co;2-#
Subject(s) - plan (archaeology) , business , health plan , health care , finance , financial plan , actuarial science , accounting , economics , economic growth , archaeology , history
Abstract In 1991, Dannon employees had the choice to stay with their current health care plan or switch to a new plan which offered a lower premium and less hospital cost coverage that better fit the needs of most employees. Both plans were the same in all other respects. Only 25% of employees chose the new lower‐premium plan over the old plan. This article reports a collaborative effort between The Dannon Company and Cornell University's Center for Advanced HR Studies to identify the patterns of employee choices, and the effects of those choices on the actual costs that employees incurred. The actual decisions of 287 Dannon employees were examined, and the out‐of‐pocket costs that they actually incurred in the two years after the plan was introduced were calculated. © 1996 by John Wiley & Sons, Inc.