The relevance of price in a customer's choice of statutory health insurance providers in germany

The German Market for Health Care Insurance has undergone significant changes since the introduction of a free choice of statutory health insurance providers in 1996. Since then, some providers have lost more than 10% of their customers, while some have more than tripled their customer base. Among many factors which led to this rapid change, the difference in price levels is often highlighted as the key motivation of choice. Representative interview based studies underline this assumption, mostly focussing on the factors for future customer choices. This article analyses the historic relevance of the price level and price changes for a customer's choice of providers. Therefore, the development of the customer basis of the most relevant providers was described via a function based, among other factors, on price level and change in price. Respective time series for the years 1996--1998 were provided by the German Federal Ministry for Health. A multiple regression method was applied to determine relevance and significance of the variables. The regression shows with an R^sup 2^ of 81,8% that the price level highly impacts a customer's choice, whereas a change of price has a very low relevance for the selection of a provider. The assumption of a high relevance of the price level for a customer's choice therefore proves correct. It follows basic economic principles as well as the development in comparably deregulated markets like telecommunication. Although the second finding, however, appears less convincing at first glance, a more in depth discussion shows that this might have been true only for the first years following the deregulation (1996-1998). Since then, customers have become more mature and might react faster and more sensitively now. This forces health care insurance providers not only to offer their services at an adequate level of quality, but also at a highly competitive price.[PUBLICATION ABSTRACT]